Journal of Economics and Management Volume 16, No. 2 September, 2020

Asymmetric Impact of FDI and International Trade on Economic Growth: Empirical Evidence from Taiwan

Thuy Linh Cao

Ph. D. Program in Business, Feng Chia University, Taiwan

Judy Hsu

Department of International Business, Feng Chia University, Taiwan

Abstract

This research explores the dynamic impact of international business on Taiwan’s economic growth. We consider three indicators: inward and outward foreign direct investment (FDI) and the total value of exports and imports. By applying a nonlinear autoregressive distributed-lag (NARDL) model, the findings prove that long- and short-term cointegrations are asymmetric with a greater effect dominated by decreasing change. Our empirical results contribute new insights on the relationships among FDI, international trade, and economic growth.

Keywords：Inward FDI, Outward FDI, Trade openness, NARDL, Economic growth.

JEL Classifications：C22, F14, F21.

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