scholarly journals ECONOMIC GROWTH IN INDIA: "DOES FOREIGN DIRECT INVESTMENT INFLOW MATTER?"

2003 ◽  
Vol 48 (02) ◽  
pp. 151-171 ◽  
Author(s):  
DUKHABANDHU SAHOO ◽  
MAATHAI K. MATHIYAZHAGAN
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Annual Data ◽  
Foreign Direct Investment Inflow ◽  
Elasticity Coefficient ◽  
Long Run ◽  
Integration Test ◽  
Opening Up

The main objective of this paper is to examine the role of Foreign Direct Investment (FDI) in promoting the growth of the economy via export promotion by using the annual data from 1979–80 to 2000–01. This study uses the Johansen co-integration test and the results demonstrate that there is a long run relationship between Gross Domestic Product (GDP), FDI and Export (EX). The same relationship is also established when the Index of Industrial Production (IIP) replaces GDP. However, the positive elasticity coefficients between FDI, GDP and FDI, IIP are less than the positive elasticity coefficient between EX, GDP and EX, IIP. It implies that EX plays a comparatively better role in the growth of the Indian economy than FDI. Thus, on the eve of India's plan for further opening up of the economy, it is advisable to open up the export-oriented sectors so that a higher growth of the economy can be achieved through the growth of these sectors.

The Determinants of the Foreign Direct Investment on the Macroeconomic Variables: The Case of the Algerian Economy

2018 ◽  
Vol 3 (1) ◽  
pp. 5-11
Author(s):  
Ahmed Smahi
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Empirical Analysis ◽  
Direct Investment ◽  
The Political ◽  
Annual Data ◽  
Bounds Testing ◽  
Macroeconomic Variables ◽  
Long Run

Foreign direct investment in Algeria as a percentage of GDP represented 0.9% during the last decade. The goal of this study is to assess the effect of Foreign Direct Investment on Algerian economy through an empirical analysis by applying the bounds testing ARDL and ECM-ARDL using annual data for the period 1970-2014. As far as the role of FDI is concerned, we shall try to highlight its effect that may show causal relationships to non-hydrocarbon GDP, non-hydrocarbon export, industry and employment in long run. Our estimation of an ARDL model indicates that the political and macroeconomic stability are not enough to attract FDI to help non-hydrocarbon sectors drive economic growth.

scholarly journals Foreign Direct Investment, Financial Development and Economic Growth Evidence from Saudi Arabia

2017 ◽  
Vol 8 (4) ◽  
pp. 228 ◽  
Author(s):  
Najeeb Muhammad Nasir ◽  
Mohammed Ziaur Rehman ◽  
Nasir Ali
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Impulse Response Function ◽  
Saudi Arabian ◽  
Causality Test ◽  
Long Run ◽  
Oil Resources ◽  
Integration Test

This study is an effort to explain and establish a relationship among foreign direct investment, financial development and economic growth in Saudi Arabian context for the period of 1970 to 2015 by employing Vector Auto Regression (VAR) and modified Granger Casualty Models. The result of Johansen co-integration test illustrates that no long run co-integration can be established among the variables. VAR has established a link between economic growth, financial development and foreign direct investment. The Granger causality test also confirms that economic growth causes foreign direct investment and financial development which is a unidirectional causality running from economic growth towards foreign direct investment and financial development. No significant causality can be observed empirically between foreign direct investment and financial development. This feature can be attributed to the fact that Saudi Arabian economy is still heavily dependent on its oil resources which is the driving force behind growth. Impulse Response Function has been utilized in order to observe the response to the shocks among the variables.

scholarly journals Causal Relationship between Foreign Direct Investment and Economic Growth in Nigeria: 1970-2013

2015 ◽  
Vol 7 (11) ◽  
pp. 230 ◽  
Author(s):  
Uwazie I. U. ◽  
Igwemma A. A. ◽  
Nnabu Bernard Eze
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Unit Root ◽  
Direct Investment ◽  
Developing Economies ◽  
Unit Root Test ◽  
Annual Data ◽  
Policy Reforms ◽  
Causality Test ◽  
Long Run

Foreign direct investment is presumed to play immense role in economic growth in both developed and developing economies. This assumption has motivated the army of studies to actually determine the nexus between foreign direct investment and economic growth in Nigeria. But these studies were not unified on the direction of the causation, hence the need for the study. To effectively analyze the result, the study employs vector error correction model method of causality to analyze the annual data for the periods of 1970 to 2013. The Augmented Dickey-Fuller (ADF) unit root test show presence of unit root at level but stationary after first difference. The Johansen cointegration test confirms that the variables are cointegrated while the granger causality test affirms that foreign direct investment and economic growth reinforce each other in the short run in Nigeria. Also, it is reported that foreign direct investment granger cause economic growth both in the short and long run in Nigeria. Based on these findings, the study advocates the adoption of aggressive policy reforms to boost investors’ confidence and promotion of qualitative human capital development to lure FDI into the country. It also suggests the introduction of selective openness to allow only the inflow of FDI that have the capacity to spillover to the economy. These will attract FDI and boost economic growth in Nigeria.

scholarly journals The role of foreign direct investment in economic growth of Nigeria

2020 ◽  
Vol 28 (2) ◽  
pp. 357-366
Author(s):  
Michael Madojemu
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Unit Root Test ◽  
Domestic Investment ◽  
Econometric Methods ◽  
Long Run ◽  
Security Challenges ◽  
Adf Test

The paper investigates the relevance of foreign direct investment (FDI) as a factor inhibiting economic growth in Nigeria. This paper inspects the sectorial influence of FDI in manufacturing, mining, oil and the telecommunications sectors on economic growth in Nigeria based on theoretical framework founded on the standard growth accounting theory, detailed analysis of the sectorial FDI over the period 1981 and 2017 was carried out. Various econometric methods are employed, such as the ADF test, Dickey and Fuller test (1979), PP test (Phillips and Perron, 1988) are used for the unit root test, and the Shahbaz and Rahman (2010) method is used for the long-run relationship between the foreign direct investment and economic growth. The paper also adapted the framework provided by M.B. Obwona (2004). The paper formalizes a mechanism of recommendations to allow for the influence of foreign direct investment in the transmission of socio-economic growth generated in Nigeria. In conclusion, government should provide an enabling environment that will encourage foreign investors to invest in Nigeria economy by addressing the security challenges in the country, understanding that investment friendly environment will improved regulatory framework as well as encourage domestic investment.

Trade Openness, Foreign Direct Investment and Economic Growth: Empirical Evidence from India

2016 ◽  
Vol 6 (2) ◽  
Author(s):  
Brajaballav Pal
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Trade Openness ◽  
Unit Root Test ◽  
Series Data ◽  
Long Run ◽  
Integration Test ◽  
The Government

This paper examines the relationship among GDP, foreign direct investment and trade openness for India using time series data from 2001 to 2016. In this study unit root test is used to solve the problem of stationery and to determine the order of integration between the variables. Johnson co-integration test suggests that there is a long run equilibrium relationship among the variables by considering relationship between Gross Domestic Product (GDP), Foreign Direct Investment (FDI) and Trade Openness (TO). The result indicates that trade openness exerts influence on foreign direct investment. The government and policy makers should take up strategies to attract foreign investment so as to promote economic growth.

scholarly journals Domestic Investment, Foreign Direct Investment, and Economic Growth Nexus: A Case of Pakistan

2014 ◽  
Vol 2014 ◽  
pp. 1-5 ◽  
Author(s):  
Irfan Ullah ◽  
Mahmood Shah ◽  
Farid Ullah Khan
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Unit Root ◽  
Direct Investment ◽  
Dynamic Interaction ◽  
Data Series ◽  
Foreign Direct Investment Inflow ◽  
Domestic Investment ◽  
Long Run ◽  
Domestic Investments

This study aims to find dynamic interaction between domestic investment, foreign direct investment, and economic growth in Pakistan for the period 1976–2010. Phillips and Perron (PP) test is used to assess unit root in the concerned data series. Johansen cointegration approach applied to examine the long run relationship and Toda-Yamamoto causality approach is exercised to evaluate causal linkages. Besides foreign direct investment inflow to Pakistan and domestic investments variables, this study also used GDP as a third variable in order to avoid misspecification problems in the model and also to know the interrelationship between the variables. The empirical findings of this study reveal the existence of long run relationship between domestic investments, foreign direct investment, and economic growth, further supported by Toda-Yamamoto causality, and bidirectional causality has been found between FDI and domestic investment implying that both domestic investment and FDI cause each other.

scholarly journals OUTWARD FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN CHINA: EVIDENCE FROM ASYMMETRIC ARDL APPROACH

2018 ◽  
Vol 19 (5) ◽  
pp. 706-721 ◽  
Author(s):  
Usman Ali ◽  
Wei Shan ◽  
Jian-Jun Wang ◽  
Azka Amin
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Annual Data ◽  
Symmetric Model ◽  
Outward Foreign Direct Investment ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Short Run ◽  
Overseas Investment

The current study explored the dynamics between economic growth and overseas investment, using time series annual data from China. For empirical analysis, we utilized asymmetric ARDL technique, which documents the potential asymmetric effects of outward foreign direct investment on economic growth in both the long run and short run. The empirical results suggest that ignoring the intrinsic asymmetries may conceal the true information about the equilibrium relationship among the variables and thus lead to misleading results. Particularly, the findings revealed that economic growth in China responds positively but differently to an increase and decrease in its overseas investment. The empirical evidence obtained through asymmetric model seemed to be superior to that of symmetric model and thus leads to more efficient policymaking to achieve sustainable economic development. Our study contributes to the existing literature by providing new insights on the outward foreign direct investment-led growth hypothesis. The findings suggest that firms investing abroad can bring source country benefits by securing access to key input factors and accessing advanced foreign technology.

The role of financial development in economic growth: empirical evidence from Indian states

2015 ◽  
Vol 10 (4) ◽  
pp. 765-780 ◽  
Author(s):  
Madhu Sehrawat ◽  
A K Giri
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Ordinary Least Squares ◽  
Annual Data ◽  
Indian States ◽  
Content Type ◽  
Long Run ◽  
Panel Granger Causality ◽  
Integration Test

Purpose – The purpose of this paper is to examine the relationship between financial development and economic growth in Indian states using annual data from 1993 to 2012. Design/methodology/approach – The stationarity properties are checked by Levin-Lin-Chu and Im-Pesaran-Shin panel unit root tests. The study employed the Pedroni’s panel co-integration test to examine the existence of long-run relationship and the coefficients of co-integration are examined by fully modified ordinary least squares. The short term and long-run causality is checked by panel granger causality. Findings – The co-integration test confirms a long-run relationship between financial development and economic growth for Indian states. The results support the supply leading hypothesis and highlight the importance of financial development in economic growth in Indian states. The findings also indicate that bank-centric financial sector of India has the potential of economic growth through credit transmission. Research limitations/implications – The present study recommends for appropriate reforms in financial market to attain economic growth in India. The findings will be useful for India’s policymakers in order to maintain the parallel expansion of financial development and economic growth. Originality/value – Till date, there is no study that includes all 28 states in analyzing the role of financial development in economic growth for Indian economy by applying latest econometric techniques. Further, the study uses gross domestic state product instead of net domestic state product as proxy for economic growth because of the presence of different depreciation rates.

scholarly journals The role of foreign direct investment and trade on carbon emissions in Turkey

2017 ◽  
Vol 8 (1) ◽  
pp. 8-17 ◽  
Author(s):  
Gizem Kaya ◽  
M. Özgür Kayalica ◽  
Merve Kumaş ◽  
Burc Ulengin
Keyword(s):  
Foreign Direct Investment ◽  
Co2 Emissions ◽  
Direct Investment ◽  
Trade Openness ◽  
Kuznets Curve ◽  
Annual Data ◽  
Long Run ◽  
Short Run ◽  
Relationship Of

This study aims to observe the long run and short run effects of gross domestic product, foreign direct investment inflows and trade on CO2 emissions and causality relationships between these factors, using annual data for the period of 1974-2010. The empirical results demonstrate that the inverted U-shaped relationship of environmental Kuznets curve is valid for Turkey. In addition, there are positive long run effects of foreign direct investment and trade openness on CO2 emissions. The authors also find a bidirectional causality relationship between CO2 emission and FDI.

scholarly journals The Accessing Foreign Aid’s Long Run Contribution to Economic Growth of Pakistan: An Evidence from Time Series Data

2021 ◽  
Vol 3 (1) ◽  
pp. 25-36
Author(s):  
Hina Ali ◽  
Javeria Masood ◽  
Afifa Sadar Ud Din
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Foreign Aid ◽  
Direct Investment ◽  
Time Series Data ◽  
Development Aid ◽  
Series Data ◽  
Annual Data ◽  
Long Run ◽  
Domestic Savings

Purpose: This research examines the effectiveness of foreign aid on Pakistan’s economic growth.  The foreign aid efficiency is still under question. Some researches show positive affiliation of foreign aid with economic growth while some show negative affiliation. If foreign aid is not replacing or used as a substitute for domestic savings then foreign aid is useful for growth. To fill the two gaps of the economy the Two-Gap theory suggest that poor nations have to depend on overseas funds. Those two gaps are the Savings-Investment Gap and Import-Export Gap. There’re many kinds of international funds. Like foreign loans, development and non-development aid, FDI, and technological help. But underdeveloped nations like Pakistan have not a favorable speculation policy. Therefore, these nations are dependent on international aid and balance quite than foreign direct investment. Design/Methodology/Approach: For the analysis of this study the time era used is 1974 to 2016. The GDP is the dependent variable. Independent variables are population growth, foreign aid, inflation, foreign direct investment (FDI), and domestic savings. The annual data is collected from different sources. The technique for analysis is OLS and ARDL bound testing. Findings: Concluding remarks show that in Pakistan foreign aid affects economic growth negatively. Implications/Originality/Value: The  current  study  was  based  on the least  considered  variables  and  the  pioneer  in  testing  the  complex relationship through OLS and ARDL estimation.

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