THE IMPACTS OF OUTWARD FDI ON ECONOMIC GROWTH IN ASEAN-8 COUNTRIES: AN EMPIRICAL INSIGHT

Abstract

ASEAN’s move to regionalise local enterprises has spurred outward foreign direct investment (FDI) flows as well as enabled sustained economic growth for ASEAN member states over the last two decades. This study examines the impact of outward FDI on economic growth in ASEAN-8 countries from 2000-2019. It employs the Pooled Mean Group (PMG) estimation approach to evaluate the effects of outward FDI on national economic growth. The findings indicate that outward FDI is positively and statistically significant in fostering economic growth in the ASEAN region over the short-run. However, such outward investments negatively impact the region’s economic growth over the long-run. The results indicate that regional policy makers need to adopt a flexible approach when formulating policy initiatives that incentivise outward FDI to ensure the continued sustenance of economic growth in the ASEAN region.