(LUẬN văn THẠC sĩ) foreign direct investment, exports, and economic growth in malaysia, thailand and vietnam

UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE THE NETHERLANDS VIETNAM VIETNAM- NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS FOREIGN DIRECT INVESTMENT, EXPORTS, AND ECONOMIC GROWTH IN MALAYSIA, THAILAND, AND VIETNAM A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By BUI THI KIM HOANG Academic Supervisor: DR NGUYEN HOANG BAO HO CHI MINH CITY, DECEMBER 2012 TIEU LUAN MOI download : skknchat@gmail.com Certification "I certificate that the substance of the thesis has not already been submitted for any degree and is not currently submitted for any other degree I certify that to the best of my knowledge and help received in preparing the thesis and all sources used have been acknowledged in the thesis." Signature Bui Thi Kim Hoang Date: TIEU LUAN MOI download : skknchat@gmail.com Acknowledgement First of all, I would like express my deepest gratitude my academic supervisor, Dr Nguyen Hoang Bao, Dean of Economic Development, HCM City University of Economics, for advice, critical, and helpful comments on the paper My dearest thanks to the lectures and staff of the project, who helped improve my knowledge and fulfill the programme I am deeply indebted to my parents, my elder brother and my husband for their love and support of me, keeping me in good condition for learning And finally, I am also grateful to my close friends for their warm encourgagement ii TIEU LUAN MOI download : skknchat@gmail.com Abstract This study exammes the causality relations between foreign direct investment, exports, and economic growth in the three countries including Malaysia, Thailand, and Vietnam of the Southeast region for the period of 19892010 The paper uses time series data for individual countries and panel data for the panel three countries The study estimate vector autoregression model (VAR) or vector error correction model (VECM) of the three variables to find Granger causal relationship for each of the three countries And then, using two different panel unit root tests it is found that all the panel variables are integrated in order one The cointegration is found for the panel variables from the Johansen Fisher panel cointegration and Kao tests The panel-Granger test support that there are bidirectional long run causal relations between the variables but there is only unidirectional from exports to foreign direct investment in the short run for the panel of three countries iii TIEU LUAN MOI download : skknchat@gmail.com Contents Certification Acknowledgement ii Abstract iii Contents iv List of Tables vi List of Figures vii List of Abbreviations viii Chapter 1: Introduction 1.1 Problem statement 1.2 Research objectives 1.3 Research questions 1.4 Research methodology 1.5 Structure of the thesis Chapter 2: Literature Review 2.1 Theoretical Literature 2.1.1 Relationship between foreign direct investment and economic growth 2.1.2 Relationship between exports and economic growth 2.1.3 Relationship between FDI and exports 2.2 Empirical studies 2.3 Conceptual framework 17 Chapter 3: Foreign Direct Investment, exports, and economic growth in Malaysia, Thailand, and Vietnam: Descriptive and Comparative Analysis 19 Foreign direct investment, exports, and economic growth in Malaysia 19 and Thailand 19 3.2 Foreign direct investment, exports, and economic growth in Vietnam 26 Chapter 4: Research Methodology 40 4.1 Data sources 40 4.2 Model Specification 40 4.3 , Estimation techniques 41 4.3.1 Individual economy's Granger causality test 41 4.3 1.1 Unit root tests for stationary time series 41 4.3.1.2 Johansen cointegration technique 43 4.3.1.3 Granger causality analysis 45 4.3.2 Panel data Granger causality test 46 4.3 2.1 Panel unit root tests iv TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam (LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam 4.3.2.2 Panel cointegration test 49 4.3.2.3 Panel causality test 50 Chapter Empirical Results 51 5.1 Unit root tests 51 5.2 Cointegration analysis 53 Chapter 6: Major Findings and Policy Implications 58 6.1 Major findings 58 6.2 Policy implications 60 6.3 Research limitations 60 References 62 Appendices 69 v TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam (LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam List of Tables Table 2.1: Summary of empirical studies on causality between FDI, exports, and economic growth 16 Table 3.1: The contribution of components of total demand to economic growth in Malaysia and Thailand, 1989-2010 (percentage) 20 Table 3.2: Correlation between the growth rates ofthe real GDP and its components in Malaysia and Thailand, 1989-2010 21 Table 3.3: Structural change in Malaysia and Thailand, 1989-2010 25 Table 3.4: The contribution of components of total demand to economic growth in Vietnam (percentage) 27 Table 3.5: Correlation between the growth rates of the real GDP and its components in Vietnam, 1989-2010 27 Table 3.6: GDP growth (g=~Y/Y), Rate of investment (I/Y), ~Y/I, ICOR in Vietnam28 Table 3.7: Structural change in Vietnam, 1989-2010 (percentage) 29 Table 3.8: Exports and Imports in Vietnam (percentage ofGDP) 30 Table 3.9: Export value index in Vietnam, 1989-2010 31 Table 3.10: Foreign direct investment inflows by Vietnam's region and province 34 Table 3.11: Foreign Direct Investment by sector in Vietnam 35 Table 3.12: FDI in industry for Vietnam country 36 Table 3.13: Exports by foreign investment sector in Vietnam 37 Table 5.1: ADF and PP unit root tests on level series for the individuals 51 Table 5.2: ADF and PP unit root tests on the first difference series for the individuals 52 Table 5.3: Panel unit root tests 53 Table 5.4: Results of Johansen cointegration test for individual country 54 Table 5.5: Panel cointegration test 54 Table 5.6: Granger causality test based on VECM for Thailand and Vietnam 55 Table 5.7: Granger causality test based on VAR model for Malaysia 56 Table 5.8: Panel Granger results 56 Table 5.9: The causality relations in this paper 57 vi TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam (LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam Wacziarg, R and K.H Welch, (2008) Trade liberalization and growth: new evidence Work Bank Economic Review, Oxford University Press, Vol 22, No.2, pp 187-231 Won, Y., F.S.T Hsiao, and D.Y Yang (2008) FDI Inflows, Exports and Economic Growth in First and Second Generation ANIEs: Panel Data causality Analyses, KIEP Working Paper, 08-02: 11-86 i Zhang, K.H (2001) Does Foreign Direct Investment Promote Economic Growth? • Evidence from East Asia and Latin America Contemporary Economic Policy, Vol.19, Issue 2, pp 175-185 UNCTAD, (2002) World Investment Report 2002: Transnational Corporation and Export Competitiveness New York and Geneva World Bank, (2012) World Development Indicators Available at: http://databank.worldbank.org/ddp/home.do?Step=12&id=4&CN0=2, 6/9/2012 Vietnam General Statistics Office, (2012) Available http://www.gso.gov.vn/default.aspx?tabid=228&ItemiD= 1915, 12/6/2012 • 68 TIEU LUAN MOI download : skknchat@gmail.com at: (LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam (LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam(LUAN.van.THAC.si).foreign.direct.investment exports and.economic.growth.in.malaysia thailand.and.vietnam Appendices Appendix 3.1: File 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