Financial Structure, Two-way FDI and Technological Progress
JING Guangzheng, LI Ping, XU Jiayun
Institution of International Economics /School of Economics, Nankai University; School of Business, Shandong University of Technology; APEC Study Center, Nankai University
Abstract:
Based on panel data of 65 countries from 1990 to 2014, from both the theoretical and empirical aspects, this paper investigates systematically the impact of financial structure on a country's technological progress and examines the mediating effect of two-way FDI. It comes to several results as follows. Firstly, market-oriented financial structure is more advantageous to promote a country's technological progress and the conclusion remain robust after overcoming the effects of endogenous and economic fluctuations. In addition, there is increasing trend for the promoting effect of financial market with the rise of the technical level of a country, but it is not as high as possible, a country needs the optimal financial structure to adapt to the development stage. Secondly, the mediation effect in the overall test shows that the two-way FDI is two kinds of channels when market-oriented financial structure promotes a country's technological progress, and OFDI plays a greater mediating effect than FDI. Thirdly, in the subgroup tests, the promoting effect of financial market on technological progress is more effective in developed countries than in developing countries, and the two-way FDI in developed and developing countries both have mediating effect, the mediating effect of two-way FDI in developing country is more significant in the total effect of technological progress.
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