The Impact of Horizontal and Vertical FDI on host Country's Economic Growth

This paper performs an unbalanced panel data analysis to investigate the impact of horizontal and vertical FDI inflows on economic growth in the ten member countries of the Association of Southeast Asian Nations (ASEAN) for the period 1995 – 2011. As far as I know, this is the first paper that explores the differential effects of horizontal and vertical multinational activity in Southeast Asia. The results of this study show that both types of FDI inflows have no significant impact on growth. When country characteristics, such as human capital, trade openness, and financial development are taken into account, only vertical FDI interacting with trade affect growth positively.