Structural Drivers Versus Short-Run Fluctuations:A Time-Varying Analysis of FDI DeterminantsIn Selected Asian Economies

  • Authors

    • Abraham C. Camba Jr. Department of Economics, College of Social Sciences and Development Polytechnic University of the Philippines, Sta. Mesa, Manila
    • Aileen L. Camba Department of Economics, College of Social Sciences and Development Polytechnic University of the Philippines, Sta. Mesa, Manila
    https://doi.org/10.14419/vfzqgr16

    Received date: November 27, 2025

    Accepted date: January 2, 2026

    Published date: February 15, 2026

  • Economic Growth; Foreign Direct Investment; Inflation; Long-Run Correction Mechanisms; Short-run Adjustments; Trade Openness

  • Abstract

    This study examines the determinants of foreign direct investment (FDI) in selected Asian economies (1970–2022) by comparing the influence of structural drivers with that of short-term fluctuations. Employing a comprehensive empirical framework—Fully Modified OLS ‎‎(FMOLS), Dynamic OLS (DOLS), and Vector Error Correction Model (VECM)—we distinguish long-run equilibrium relationships from ‎transient dynamics. The long-run estimates identify key structural drivers: economic growth exerts a strong positive effect, affirming the ‎market-size hypothesis, whereas inflation and trade openness exhibit significant negative effects, pointing to the deterrents of macroeconomic instability and intense competitive pressures from liberalization, respectively. Conversely, short-run analysis reveals limited transient effects. The VECM indicates no short-run convergence to equilibrium, and Granger causality tests show that only trade openness has a significant short-run causal impact on FDI. This dichotomy is further elucidated by time-varying impulse response functions, which confirm that ‎FDI reactions to macroeconomic shocks are asymmetric and period-specific. Notably, trade innovations generate the most substantial short-term gains, despite their negative long-term effects. Overall, the findings robustly demonstrate that FDI in the region is fundamentally anchored by long-term structural conditions—namely, stable prices, managed trade integration, and sustained economic expansion—while ‎being only marginally influenced by short-run fluctuations.

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  • How to Cite

    Camba Jr., A. C., & Camba, A. L. . (2026). Structural Drivers Versus Short-Run Fluctuations:A Time-Varying Analysis of FDI DeterminantsIn Selected Asian Economies. International Journal of Accounting and Economics Studies, 13(2), 193-202. https://doi.org/10.14419/vfzqgr16