The Effects of the Foreign Direct Investment and Openness on the Domestic Investment and Economic Growth: Case Study of 10 Asian Developing Countries

Considering the process of globalization and the importance of trade and foreign direct investment، the effects of the trade openness of countries and attraction mechanism of foreign direct investments to domestic investment and economic growth during 1980-2008 has been studied in 10 Asian developing countries in this paper. In order to estimate the model the GMM model and panel data method with fixed effects has been used dynamically. Results show that domestic investment، foreign direct investment، trade openness and human capital have had positive and significant effect on economic growth in these countries، but inflation and financial development have had negative and significant effect on economic growth. Also، they indicate that economic growth، foreign direct investment and financial development have had positive and significant effect on domestic investment in these countries، but trade openness has had negative and significant effect on the level of investment in these countries during selected time span