The Effect of Foreign Direct Investment on Gross Domestic Saving in Iran

Saving is the main determinant in both domestic investment and economic growth. This article examines the effects of foreign direct investment (FDI), gross domestic product, inflation rate and exports on gross domestic saving rate in Iran. For this purpose, we use annual data during 1983-2016. Estimations of the Auto Regressive Distributed Lags model (ARDL) show that foreign direct investment has negative effect on gross domestic saving, but gross domestic product, inflation rate, and exports are of positive effects on it. Also, error correction model (ECM) indicates the adjustment coefficient about 0.57, which means that imbalances in gross domestic saving rate will be adjusted with a high speed from one period to the next period.