Symmetrical and Asymmetrical Analysis of the Impact of Government Size on the Motivation for Foreign Investment in Iran

Document Type : Original Article

Authors

1 Associate Professor, Department of Energy Economics, Faculty of Economic and Administrative Sciences, Mazandaran of University, Babolsar, Iran

2 Ph.D. Student in Econometrics, Faculty of Economics, Allameh Tabatabai University, Tehran, Iran.

3 Ph.D. Student in Econometrics, Faculty of Economics, University of Tehran, Tehran, Iran

Abstract

Foreign direct investment (FDI) is a crucial element for economic development, particularly for developing and emerging economies. Public expenditure is a very important economic tool for the government. Therefore, understanding the effects of government size on the flow and motivation for foreign investment to enhance economic growth is vital. In this study, the motivation for foreign investment was first calculated using the MIMIC method and then normalized. Subsequently, the symmetric and asymmetric effects of government size on the motivation for foreign investment were examined using the autoregressive with linar and non-linear distributed lag approach, over the period from 1973 to 2022. The results of the calculation of foreign investment motivation indicate that there was a downward trend from the end of the war until the second development plan, followed by a fluctuating trend thereafter. The highest and lowest average motivations for foreign investment corresponded to the fourth and second development plan periods, respectively. Long-run estimation results show that increases and decreases in government size are directly (positively) associated with motivation for foreign investment. Specifically, the direct effect of increases in government size on the motivation for foreign investment is greater than the effect of decreases, ...

Keywords

Main Subjects

References

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History

  • Receive Date: 16 September 2024
  • Revise Date: 17 January 2025
  • Accept Date: 17 January 2025
  • Publish Date: 21 March 2025

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