Sectoral Analysis of Foreign Direct Investment on the Country Economy in Myanmar

Foreign direct investment (FDI) is of vital importance for such developing countries as Myanmar. It brings such main important instruments as capital (foreign capital inflows), exports and trade, and new technology to the host countries. Thus, Myanmar is committed to encouraging FDI to strengthen its economy. This study’s goal is to determine the sectoral FDI that has an influence on Myanmar’s economy. The time frame for the study is from 1990 to 2020. The random effect model was employed to discover which and how FDI sectors influence on the economic growth in this study. Two-stage least squares estimator was employed to solve the endogeneity problem. There is no endogeneity problem in this study. According to the results, the explanatory variables statistically significantly and positively influence on the growth. Thus, all FDI sectors have the positive impacts on the economy. Among them, the coefficient value of the FDI secondary sector is the highest. Hence, manufacturing sector, power sector, and construction sector support economic development of Myanmar. Therefore, the government should attract more FDI into the manufacturing sector, as this can lead to the higher productivity and then to more exports, which can earn much more foreign currencies and strengthen the economy in Myanmar.