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FDI Inflows-Economic Globalization Nexus in ASEAN Countries: The Panel Bootstrap Causality Test Based on Wavelet Decomposition

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Abstract

This study aims to investigate the causal linkage between foreign direct investment (FDI) inflows and economic globalization (considering de facto and de jure indexes) for 7 Association of Southeast Asian Nations (ASEAN) countries for 1985–2018. Our sample consists of Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Empirically, we propose the panel bootstrap causality test based on wavelet decomposition to find a causal link between the series in different time scales. The main advantages of the methodology can be listed as follows; (a) testing the unit root behavior of the series, or existence of a cointegration relationship between the series are not pre-requisites, (b) one can test the causal relationship between the series in different time scales. Also, we employ the panel bootstrap causality test of Kónya (Econ Modell 23:978–992, 2006) to compare our results with the panel bootstrap causality test based on wavelet decomposition. In addition to the causality analyses, this study utilizes the panel bootstrap cointegration test of Westerlund-Edgerton (2007) to find long-run relationship between variables. The proposed method’s results exhibit that ASEAN countries’ FDI inflows and types of economic globalization levels have mutually affected each other, especially in the long-run. The empirical findings offer some significant implications for policymakers.

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Availability of data and material

The datasets used and/or analyzed during the current study are available from the corresponding author on a reasonable request.

Code availability

The code conducted during the current study are available from the corresponding author on a reasonable request.

Notes

  1. The empirical results for the causal link between FDI inflows and economic globalization are provided by the authors to us.

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Authors and Affiliations

  1. Department of Economics, Faculty of Political Sciences, Ankara Yıldırım Beyazıt University, Esenboğa Campus, 06670, Çubuk, Ankara, Turkey

    Muhammed Sehid Gorus

  2. Department of Economics, Faculty of Political Sciences, Canakkale Onsekiz Mart University, Terzioğlu Campus, 17100, Canakkale, Turkey

    Veli Yilanci

  3. School of Finance and Economics, Jiangsu University, 301 Xuefu Road, Zhenjiang, China

    Maxwell Kongkuah

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  1. Muhammed Sehid Gorus
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Gorus, M.S., Yilanci, V. & Kongkuah, M. FDI Inflows-Economic Globalization Nexus in ASEAN Countries: The Panel Bootstrap Causality Test Based on Wavelet Decomposition. Asia-Pac Financ Markets 30, 339–362 (2023). https://doi.org/10.1007/s10690-022-09377-5

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