Spatial Interdependence Between Mongolia, China, and Russia: Impact on Mongolian Inward FDI and Sustained Economic Growth

Abstract

In addition to furthering the discussion on the determinants of foreign direct investment (FDI) in Mongolia, the paper at hand aims to primarily address the age-old question of whether being situated next to global economic powers alleviates, or hinders, your economic prosperity. In other words, are the developmental successes of your neighbors translated across borders to positively, or negatively, affect yours. Our results support the significance of the short- and long-run relationships between the variables of interest for Mongolia, ultimately accentuating their mutually reinforcing affiliations; thereby leading to policy implications, which are then briefly discussed. The main findings of the paper highlighted the enhancing impact Russia’s economic growth has on FDI inflows to Mongolia; while contrary to popular belief, the economic growth of China was found to deter Mongolian inward FDI.