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Title: Three empirical essays on foreign direct investment, research and development, and insurance
Author: Wan Ngah, Wan Azman Saini
ISNI:       0000 0004 2679 4101
Awarding Body: University of Southampton
Current Institution: University of Southampton
Date of Award: 2009
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This dissertation consists of three independent essays, all of which are empirical treatments of different determinants of economic growth. The first essay, which is in Chapter 2, evaluates the role economic freedom plays in mediating the effect of foreign direct investment (FDI) on growth. It tests whether countries with sufficiently high level of economic freedom can exploit FDI more efficiently. It uses cross-country observations from 84 countries for the 1976-2005 period. It applies a threshold regression which is flexible enough to accommodate the possibility that the impact of FDI on growth ‘kicks in’ only when the level of economic freedom exceeds some unknown threshold. The results show that FDI has no direct (linear) effect on output growth. Instead, its impact is conditional on the level of economic freedom in the host countries. Only countries whose level of economic freedom has exceeded the threshold level of economic freedom benefited from FDI inflows. In countries below the threshold level, FDI deliver no beneficial effects. The findings are robust to several sensitivity checks and consideration of endogeneity. The second essay (Chapter 3) tests the channels and magnitude of R&D spillovers from developed countries to East Asian countries (China, Korea, Malaysia, Singapore, and Thailand). It examines three possible spillover channels - imports, inward FDI, and outward FDI - using panel data for the period 1984-2005. It uses a novel panel estimator which allows for cross-sectional dependence and provides country-specific estimates of R&D effects. There are several important conclusions emerge. First, both domestic and foreign R&D are important for productivity improvements. Second, imports are the most important channel of spillovers while spillover effects via FDI in uncertain. Third, there is some evidence that domestic R&D helps to increase the incidence of R&D spillovers, especially via import channel. Fourth, the U.S. is a relatively stronger provider of spillovers than Japan. Chapter 4, which is the final essay, examines the impact of insurance sector development on output growth, capital accumulation and productivity improvement. It uses panel data from 52 countries for the period 1981-2005, and applies a recent generalizedmethod- of moments (GMM) dynamic panel estimator. The results show that the development of insurance sector is important for long-run output growth, capital accumulation and productivity growth. For developing countries, insurance affects growth predominantly through capital accumulation while in developed countries it enhances productivity growth. The findings are robust to biases introduced by unobserved countryspecific effects, simultaneity, weak or numerous instruments. It remains valid even after controlling for bank and stock market developments.
Supervisor: Pitarakis, Jean-Yves ; Calvo-Pardo, Hector ; Smith, Peter Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: HB Economic Theory