Original scientific paper
https://doi.org/10.1080/1331677X.2022.2030244
Research methods in economics and its implications for capital formation
Waqar Ameer
Helian Xu
Kazi Sohag
Musaad Mansoor Halwan
Azka Amin
Abstract
We explore whether public or private capital augments or
obstruct Foreign Direct Investment (FDI) inflows by decomposing
Domestic Capital Formation (DCF) into private and public capital
formation. To this end, we apply Cross-Sectional Autoregressive
Distributed Lags (CS-ARDL) approach to analyze panel time-series
data. Our empirical results show that public capital crowds in FDI
inflows while private capital crowds out FDI inflows. However,
institutional quality significantly attracts FDI inflows for less developing economies. We argue that private and public capital possess different attributes; thus, clubbing them together might
result in aggregation bias. We observe a strong connection of
good institutional quality with private and public capital to augment foreign capital inflows for developing countries in the long
run. Besides, our empirical results suggest that returns are high
with quality institutions, especially for developing regions. Our
result estimations provide several policy implications.
Keywords
FDI; institutional quality; domestic capital formation; cross-sectional dependency; panel data
Hrčak ID:
302859
URI
Publication date:
31.3.2023.
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