The Impact of FDI and Financial Sector Development on Economic Growth: Empirical Evidence from Asia and Oceania

Yen Li Chee, Mahendhiran Nair


This paper empirically examines if financial sector development is an important precondition for foreign direct investment (FDI) to enhance economic growth in the Asia-Oceania region. The study will also examine whether the impact is dependent on the stages of development of the countries. Panel data methods (fixed effects-estimator and random effects-estimator) were used to analyse the relationship between FDI, financial sector development and economic growth on a sample of 44 Asia and Oceania countries for the period 1996-2005. The empirical analysis showed that financial sector development enhances the contribution of FDI on economic growth in the region. It also showed that the complementary role of FDI and financial sector development on economic growth is most important for least developed economies in the region. Key strategies to enhance the role of FDI and financial development on economic growth in developing and least developed Asia and Oceania countries are also discussed in the paper.

Full Text:



International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

Copyright © Canadian Center of Science and Education

To make sure that you can receive messages from us, please add the '' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.