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The impact of foreign direct investment on economic growth in Singapore between 1980 and 2014

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Abstract

This investigation analyses the impact of foreign direct investment (FDI) on economic growth by considering the model country Singapore. This was primarily motivated by robust increases in economic performance in the Singapore economy, which was accompanied by similar patterns in foreign direct investment. Such distinct patterns have generated different perceptions and no consensus has yet been achieved in terms of the impact of foreign direct investment on economic growth, particularly with regards to Singapore. The study employed a Vector Error Correction Model on the period between 1980 and 2014, considering World Bank data statistics. The results from the study show strong evidence of the absence of a long-run relationship or causality that runs from gross savings, foreign direct investment, trade and gross fixed capital formation. It was observed that the variables in question do not Granger cause each other in the long-run. However, negative associations between GDP and gross savings as well as FDI and international trade were observed, although Gross fixed capital accumulation was found to be positively related to economic growth.

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Authors and Affiliations

  1. Faculty of Economics and Administrative Sciences, Department of Economics, Near East University, Yakin DoğuBulvarı, Nicosia, Cyprus

    Ergin Akalpler & Hemn Adil

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  1. Ergin Akalpler
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  2. Hemn Adil
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Correspondence to Ergin Akalpler.

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Akalpler, E., Adil, H. The impact of foreign direct investment on economic growth in Singapore between 1980 and 2014. Eurasian Econ Rev 7, 435–450 (2017). https://doi.org/10.1007/s40822-017-0071-3

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