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Article

Open Access

Analysis of the Relationship Between GDP and FDI on the Economic Growth of Laos

Author(s)

Thanet Wattanakul

Full-Text PDF Download XML 1056 Views

DOI:10.17265/2328-7144/2018.04.005

Affiliation(s)

Khon Kaen University, Khon Kaen, Thailand

ABSTRACT

In the current globalization stream, the foreign investment is an important role not only for developed country but at all especially the least developing country as Laos. This study aims to examine the relationship between the gross domestic product (GDP) and foreign direct investment (FDI) on economic growth of Laos by using data from 1985 to 2014. The long run relationship was analyzed by Johansen co-integration test and estimated the speed of adjustment by Vector Error Correction approach. Estimated results indicated that there was long run relationship running from FDI to GDP and the relation would return to the equilibrium in about 19 when it occurred. This study suggests that policy maker should improve the other factor for motivated FDI and accelerate Lao economy.

KEYWORDS

GDP, FDI, Laos, co-integration, VECM

Cite this paper

Economics World, July-Aug. 2018, Vol. 6, No. 4, 295-302 doi: 10.17265/2328-7144/2018.04.005

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