Economic Change and Restructuring

, Volume 38, Issue 3–4, pp 235–256 | Cite as

The dynamic interactions among foreign direct investment, economic growth, exports and unemployment: evidence from Taiwan

  • Shu-Chen Chang


The vector autoregression (VAR) method of variance decomposition and impulse response function analysis was applied to analyze dynamic relationships among foreign direct investment (FDI), economic growth, unemployment, and trade in Taiwan. The analysis results show that both economic growth and exports have positive impacts on FDI inflow; however, export expansion has a negative impact on FDI outflow. FDI inflow also has an obvious positive impact on exports and economic performance. The evidence also shows that there is no relationship between FDI inflow and unemployment. In addition, we found that a positive relationship exists between economic growth and exports while a negative relationship exists between unemployment and economic growth.


Economic growth Foreign direct investment Vector autoregression 


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© Springer Science+Business Media, LLC 2006

Authors and Affiliations

  1. 1.Department of Business AdministrationNational Formosa UniversityYunlinTaiwan, ROC

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