Effects of foreign direct investment in Mindanao
Date
2008-03
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Abstract
This paper analyses the impacts of foreign direct investment (FDI) in Mindanao, Philippines, establishing the fundamentals to economic growth thereby justifying the proposition that it is important to invest in this major island of the country.
To formalise the argument of the potential growth enhancing effect of FDI, it presents a cross regional empirical analysis of the effects of FDI on regional economic growth through regression analysis on production and non-agricultural wages of Mindanao-regions IX, X, XI, XII, and Caraga-using pooled cross-section and time-series data set. The paper discusses how new and expanded foreign direct investments (HOI-registered) affect regional economic growth from 1994-2003 based on the hypothesis that FDI has significant positive effects on production capability and wages.
The results indicate that indeed foreign direct investments have a positive impact on non- agricultural wages and that the significance of FDI and labor on GDP varies across the regions. It becomes apparent that the impacts of these FDIs are a function of their intensity - the higher the share of FDI relative to the region's total investments, the higher is the coefficient of the total factor productivity that is its potential contribution to economic growth.
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Keywords
Foreign investment, Direct investment, Investment, Mindanao, FDI, Economic growth