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THE IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH AND DOMESTIC INVESTMENT IN CAMBODIA

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Written by Mekong Institute

This paper examines the impact of foreign direct investment (FDI) on economic growth and the  linkages  between  FDI  and  domestic  investment (DI) in  Cambodia.  This  study  uses secondary data from 36 countries and covers the time period 2004-2012 in order to determine the impact of FDI inflows on economic growth by using macroeconomic and dynamic panel data  analyses of the  impact  of  FDI  on  domestic  investment.  The  study  finds  that  there  are positive  relationships  between FDI  and growth.  The  estimation  in  this  paper  shows  that human capital has a insignificant but positive relationship with FDI through a spillover effect. The estimation techniques are fixed and random effects. The Hausman test indicates that the fixed  effects  are  more  applicable.  The  Generalized Method  of  Moments  (GMM) technique for panel data shows that FDI had a positive but insignificant impact on domestic investment. The  author  neither  rejects  the  hypothesis  that  FDI  crowds out  domestic  investment  nor accepts that FDI has a direct impact on domestic investment. Therefore, this study suggests a negative competition effect that dominates a positive technology effect.

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Mrs. Guohua Liu

Director, Sustainable Energy & Environment (SEE) Department

Mrs. Liu Guohua is the Director of the Sustainable Energy and Environment Department at the Mekong Institute. Prior to this role, she worked in the Department of International Economic Affairs at the Ministry of Foreign Affairs of China, where she played a key role in shaping and implementing China’s cooperation strategies with UN development agencies. During this time, Mrs. Liu was actively involved in advancing initiatives related to the Sustainable Development Goals (SDGs), with a focus on climate change and green development. Additionally, she contributed to the evaluation of projects funded by various Chinese initiatives, such as the Global Development and South-South Cooperation Fund, Lancang-Mekong Cooperation Special Fund, etc.

In addition to her work in the Department of International Economic Affairs, Mrs. Liu has an extensive diplomatic background. She spent 7 years in the Department of African Affairs, followed by a 4-year tenure at the Chinese Embassy in Lao PDR, where she gained deep expertise in both Southeast Asian and African affairs. These diverse experiences have played a crucial role in shaping her approach to sustainable development and international collaboration, particularly in building regional partnerships and tackling global challenges like climate change.

She holds a Master’s degree in Economics, with a specialization in Finance, from the Central University of Finance and Economics, and a Bachelor’s degree in Economics, specializing in International Economics and Trade, from the Shanghai University of International Business and Economics.