Foreign Direct Investment: A Comprehensive Study Comparing the Asian Markets at Different Stages of Economic Development

Abstract

This paper examines how the relationship between IFDI and its determinants change depending on di erent economic development stages in Asia - following The Strategies of the Flying Geese and patterns of IFDI and the previous work by Jadhav (2012), Rashid et.al (2016) and Jaiblai and Shenai (2019). The sample consists of panel time-series data between 2000 and 2018 and comprises a total of 20 Asian countries, divided into four groups of economic development stages: emerging countries, developing countries, transition countries and LDCs. The empirical results reveal that: (i) an increase in exchange rate a ects the relationship between IFDI more negative in transition countries as compared to LDCs, (ii) an increase in in ation rate a ects the relationship between IFDI more positive in emerging countries as compared to developing countries, (iii) an increase in in ation rate a ects the relationship between IFDI more positive in emerging countries as compared to LDCs, and (iv) there are larger di erences in terms of in ation across countries which are much further apart in their economic development stages.