The dynamics of foreign direct investment and exchange rates: An interconnection approach in ASEAN

Figures & data

Table 1. Predicted signs of the theoretical model explanatory

FDI Types	FDI in neighboring countries (ρ)	Market Potential of neighboring countries ($\mathit{\phi })$
Horizontal FDI	0	0
Vertical FDI	-	0
Export-platform FDI	-	+
Complex vertical FDI	+	+/0

Table 2. Descriptive statistics

	Mean	Median	Std. dev
FDI GLOBAL	0.631	0.235	1.071
FDI INTRA-ASEAN	0.1	0.034	0.168
FDI EXTRA-ASEAN	0.53	0.193	0.998
MARKET	11.313	11.888	1.578
OPENNESS	1.275	1.105	0.932
POL^2	−0.181	−0.104	0.943
XR	4.974	3.825	3.708
INF	4.533	4.595	0.31
INFRA	44.8	20.5	62.866

Table 3. Coefficient estimation and LM test of the non-spatial panel model

	W1			W2
Variables	FDI Global	FDI Intra-ASEAN	FDI Extra-ASEAN	FDI Global	FDI Intra-ASEAN	FDI Extra-ASEAN
MARKET	1.365***	0.070	1.295***	1.365***	0.070	1.295***
	(−4.507)	(−1.333)	(−4.536)	(−4.5070)	(−1.333)	(−4.536)
OPENNESS	−1.012***	−0.088***	−0.923***	−1.012***	−0.088***	−0.923***
	(−5.291)	(−2.663)	(−5.122)	(−5.291)	(−2.663)	(−5.122)
POL	0.137	0.050**	0.087	0.137	0.050**	0.087
	(−1.112)	(−2.318)	(−0.753)	(−1.112)	(−2.318)	(−0.753)
XR	−0.029	0.035***	−0.063	−0.029	0.035***	−0.063
	(−0.544)	(−3.785)	(−1.274)	(−0.544)	(−3.785)	(−1.274)
INF	−0.760**	0.023	−0.783**	−0.760**	0.023	−0.783**
	(−2.369)	(−0.419)	(−2.591)	(−2.369)	(−0.419)	(−2.591)
INFRA	0.004	0.007***	−0.003	0.004	0.007***	−0.003
	(−0.998)	(−9.990)	(−0.781)	(−0.998)	(−9.990)	(−0.781)
R-squared	0.338	0.570	0.291	0.338	0.570	0.291
Adjusted R-squared	0.319	0.558	0.270	0.319	0.558	0.270
Log Likelihood	−121.299	193.852	−110.657	−121.299	193.852	−110.657
LM spatial lag	3.115*	0.016	4.725**	0.067	0.095	0.114
LM spatial error	6.989***	1.200	7.405***	5.004**	0.497	4.214**
Robust LM spatial lag	2.076	2.534	0.789	13.665***	4.868**	11.697***
Robust LM spatial error	5.950**	3.718*	3.469*	18.602***	5.270**	15.798***
Spatial fixed effect LR test	123.126***	94.855***	124.310***	123.126***	94.855***	124.310***
Time fixed effect LR test	15.563	9.873	14.848	15.563	9.873	14.848

Notes. The t-values are given in the parentheses. ***, **, and * denote statistical significance at the 1%, 5%, and 10% significance levels, respectively. LM means Lagrange multiplier. LR means likelihood ratio. All testing results of LM and robust LM are under the spatial fixed effect.

Table 4. Estimation results of spatial panel model in the whole sample (FDI Global case)

Variables	W1			W2
	SAR_FE	SEM_FE	SDM_FE	SAR_FE	SEM_FE	SDM_FE
	Spatial fixed effects	Spatial fixed effects	Spatial fixed effects	Spatial fixed effects	Spatial fixed effects	Spatial fixed effects
MARKET	1.637***	1.704***	1.585***	1.400***	1.515***	1.580***
	(5.013)	(6.347)	(4.212)	(4.496)	(5.440)	(4.428)
OPENNESS	−1.070***	−1.013***	−0.618***	−1.024***	−1.009***	−0.996***
	(−5.543)	(−5.917)	(−3.429)	(−5.246)	(−6.090)	(−4.225)
POL	0.111	0.138	−0.140	0.132	0.189	0.217*
	(0.890)	(1.130)	(−1.207)	(1.058)	(1.525)	(1.689)
XR	−0.021	0.013	−0.092*	−0.029	−0.042	−0.134***
	(−0.395)	(0.255)	(−1.852)	(−0.545)	(−0.819)	(−2.600)
INF	−0.901***	−1.242***	−0.524*	−0.783**	−1.046***	−0.911***
	(−2.804)	(−4.213)	(−1.794)	(−2.414)	(−3.432)	(−2.821)
INFRA	0.006	0.008**	0.011***	0.004	0.002	−0.003
	(1.559)	(2.125)	(2.845)	(1.031)	(0.473)	(−0.763)
W*MARKET			3.690***			2.509***
			(3.694)			(3.901)
W*OPENNESS			−0.903**			−0.342
			(−2.047)			(−1.018)
W*POL			−0.477			0.385*
			(−1.392)			(1.805)
W*XR			0.151			−0.318**
			(0.759)			(−2.045)
W*INF			−4.755***			−3.028***
			(−4.836)			(−4.321)
W*INFRA			0.108***			−0.021*
			(4.963)			(−1.794)
W*dep.var.	−0.227*		−0.779***	−0.048		−0.139*
	(−1.638)		(−4.634)	(−0.657)		(−1.723)
spat.aut.		−0.541***			−0.295***
		(−3.135)			(−3.734)
teta
R-squared	0.807	0.798	0.874	0.803	0.800	0.844
Wald test spatial lag			73.662***			39.249***
LR test spatial lag			64.824***			40.688***
Wald test spatial error			62.319***			36.395***
LR test spatial error			57.845***			32.585***
Hausman Test	21.102***	−42.818***	43.396***	37.866***	−20.692***	30.990***

Notes. The t-values are given in the parentheses. ***, **, and * denote statistical significance at the 1%, 5%, and 10% significance levels, respectively.

Table 5. Estimation results of spatial panel model in FDI Intra-ASEAN case

Variables	W1			W2
	SAR_FE	SEM_FE	SDM_FE	SAR_FE	SEM_FE	SDM_FE
	Spatial fixed effects	Spatial fixed effects	Spatial fixed effects	Spatial fixed effects	Spatial fixed effects	Spatial fixed effects
MARKET	0.074	0.086*	0.132*	0.065	0.079	0.149**
	(1.256)	(1.702)	(1.877)	(1.18)	(1.501)	(2.411)
OPENNESS	−0.089***	−0.096***	−0.003	−0.087**	−0.091***	−0.029
	(−2.637)	(−2.968)	(−0.096)	(−2.573)	(−2.797)	(−0.719)
POL	0.049**	0.051**	0.036*	0.050**	0.049**	0.053**
	(2.273)	(2.351)	(1.685)	(2.316)	(2.271)	(2.390)
XR	0.034***	0.035***	0.011	0.035***	0.034***	0.016*
	(3.734)	(3.798)	(1.174)	(3.769)	(3.666)	(1.756)
INF	0.021	−0.002	0.055	0.027	0.011	0.004
	(0.371)	(−0.029)	(1.015)	(0.484)	(0.192)	(0.064)
INFRA	0.007***	0.007***	0.007***	0.007***	0.007***	0.006***
	(9.880)	(10.080)	(9.453)	(9.685)	(9.954)	(7.880)
W*MARKET			0.375**			0.324***
			(2.150)			(2.946)
W*OPENNESS			−0.187**			−0.084
			(−2.322)			(−1.466)
W*POL			0.059			0.036
			(0.924)			(0.964)
W*XR			−0.094**			−0.058**
			(−2.553)			(−2.146)
W*INF			−0.536***			−0.463***
			(−3.098)			(−3.852)
W*INFRA			0.016***			0.000
			(3.740)			(−0.004)
W*dep.var.	−0.017		−0.342**	0.028		−0.101
	(−0.138)		(−2.211)	(0.375)		(−1.244)
spat.aut.		−0.233			−0.062
		(−1.484)			(−0.753)
R-squared	0.758	0.757	0.821	0.758	0.758	0.81
Wald test spatial lag			56.134***			46.792***
LR test spatial lag			51.293***			42.838***
Wald test spatial error			52.863***			45.322***
LR test spatial error			49.544***			42.413***
Hausman Test	22.546***	−19.678***	53.190***	19.267***	−18.239***	46.615***

Notes. The t-values are given in the parentheses. ***, **, and * denote statistical significance at the 1%, 5%, and 10% significance levels, respectively.

Table 6. Estimation results of spatial panel model in FDI Extra-ASEAN case

Variables	W1			W2
	SAR_RE	SEM_FE	SDM_RE	SAR_RE	SEM_FE	SDM_FE
	Spatial random effects	Spatial fixed effects	Spatial random effects	Spatial random effects	Spatial fixed effects	Spatial fixed effects
MARKET	0.221**	1.595***	1.097***	0.218**	1.396***	1.415***
	−2.257	−6.305	−10.239	(2.229)	(5.255)	(4.095)
OPENNESS	−0.903***	−0.910***	−0.639***	−0.895***	−0.918***	−0.954***
	(−5.143)	(−5.641)	(−3.832)	(−5.102)	(−5.776)	(−4.175)
POL	0.267**	0.085	0.378***	0.267**	0.133	0.165
	−2.352	−0.745	−2.807	(2.356)	(1.132)	(1.325)
XR	−0.090*	−0.021	0.021	−0.089*	−0.070	−0.149***
	(−1.933)	(−0.444)	−0.757	(−1.912)	(−1.454)	(−2.985)
INF	0.063	−1.208***	−0.861***	0.064	−0.993***	−0.896***
	−0.3	(−4.349)	(−4.288)	(0.308)	(−3.422)	(−2.868)
INFRA	−0.006*	0.001	−0.015***	−0.006*	−1.334	−0.009**
	(−1.833)	−0.306	(−6.165)	(−1.828)	(−1.334)	(−2.236)
W*MARKET			3.636***			2.161
			−8.989			(3.473)
W*OPENNESS			−3.752***			−0.265
			(−5.790)			(−0.814)
W*POL			0.563*			0.344*
			(−0.916)			(1.667)
W*XR			−0.229*			−0.257
			(−1.242)			(−1.706)
W*INF			−3.323***			−2.551
			(−3.117)			(−3.758)
W*INFRA			−0.043**			−0.022
			(−2.302)			(−1.873)
W*dep.var.	0.017		−0.929***	0.058		−0.102
	(−0.133)		(−5.585)	(0.753)		(−1.258)
spat.aut.		−0.540***			−0.271***
		(−3.130)			(−3.399)
R-squared	0.764	0.794	0.834	0.765	0.796	0.831
Wald test spatial lag			161.370***			29.025
LR test spatial lag			48.312***			31.021
Wald test spatial error			101.404***			27.622
LR test spatial error			25.942***			24.455
Hausman Test	12.561	−38.343***	10.738	7.483	−15.247	27.112

Notes. The t-values are given in the parentheses. ***, **, and * denote statistical significance at the 1%, 5%, and 10% significance levels, respectively.