scholarly journals The long-run effect of foreign direct investment on total factor productivity in developing countries: a panel cointegration analysis

2017 ◽  
Vol 54 (2) ◽  
pp. 309-342 ◽  
Author(s):  
Dierk Herzer ◽  
Julian Donaubauer
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Total Factor Productivity ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Cointegration Analysis ◽  
Factor Productivity ◽  
Long Run

scholarly journals Macroeconomic determinants of total factor productivity and its trend in Ethiopia

2019 ◽  
Vol 8 (6) ◽  
pp. 219-228
Author(s):  
Adisu Abebaw Degu ◽  
Dagim Tadesse Bekele
Keyword(s):  
Foreign Direct Investment ◽  
Total Factor Productivity ◽  
Direct Investment ◽  
Time Series Data ◽  
Trade Openness ◽  
Government Expenditure ◽  
Series Data ◽  
Factor Productivity ◽  
Macroeconomic Factors ◽  
Long Run

Total factor productivity (TFP) as a source of economic growth, has been recognized in economic theory for a long period of time. In this research we tried to examine the effect of some macroeconomic factors, which include trade openness, inflation, government expenditure, credit extended and foreign direct investment, and natural disaster drought on total factor productivity and its trend in Ethiopia by using Time series data spanning from 1991 to 2018.  The TFP was computed by using the growth accounting method from Cobb–Douglas production function.  ARDL was used for estimation of the short and long run econometric model.  Accordingly, the trend analysis shows the growth in TFP has been fluctuating over the study period. The result from ARDL indicated that; in long run foreign direct investment, government expenditure and drought negatively and significantly affect TFP. Credit extended is found to affect TFP positively and significantly, while inflation and trade openness are insignificant. Therefore, policies such as; subsidizing domestic firms, effective government spending and making the agriculture sector drought resistant need to be stimulated.

scholarly journals QUALITY OF INSTITUTIONS AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES: CAUSALITY TESTS FOR CROSS‐COUNTRY PANELS

2006 ◽  
Vol 7 (3) ◽  
pp. 103-110 ◽  
Author(s):  
Hea-Jung Hyun
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Long Run ◽  
Panel Cointegration Test ◽  
Quality Of Institutions ◽  
Causality Tests ◽  
Short Run

This paper analyzes the short-run and long-run dynamics between quality of institutions and foreign direct investment (FDI) in the sample of 62 developing countries covering the period 1984–2003. Panel cointegration test and FM OLS (Fully Modified OLS) estimators are used to test for cointegration. For short‐run dynamics, we estimate error correction model using fixed effect OLS and system GMM estimators. Institutional quality and FDI are found to have bi‐directional cointegrating relationship in the long-run. However, there is no evidence in favor of short-run causality between two variables.

Does foreign direct investment spillover total factor productivity growth? A study of Indian drugs and pharmaceutical industry

2017 ◽  
Vol 24 (7) ◽  
pp. 1937-1955 ◽  
Author(s):  
Nitin Arora ◽  
Preeti Lohani
Keyword(s):  
Foreign Direct Investment ◽  
Pharmaceutical Industry ◽  
Total Factor Productivity ◽  
Direct Investment ◽  
Spillover Effect ◽  
Foreign Firms ◽  
Factor Productivity ◽  
Content Type ◽  
Domestic Firms ◽  
Tfp Growth

Purpose Foreign firms have certain advantages which may spillover to domestic firms in the form of improvements in total factor productivity (TFP) growth. The purpose of this paper is to empirically observe the presence of TFP spillovers of foreign direct investment (FDI) to domestic firms through analyzing source of TFP growth in Indian drugs and pharmaceutical industry. Design/methodology/approach This paper examines the sources of TFP spillovers of FDI in Indian drugs and pharmaceutical industry over the period 1999 to 2014. The data of 304 firms has been used for estimation of the growth rates of TFP and its sources under stochastic frontier analyses based Malmquist productivity index framework. For frontier estimation, the Wang and Ho (2010) model has been executed using translog form of production function. Findings The results show that there exists significant TFP spillover effect from the presence of foreign equity in drugs and pharmaceutical industry of India. The results also show that the major source of TFP fluctuations in the said industry is managerial efficiency that has been significantly affected by FDI spillover variables. In sum, the phenomenon of significant Intra-industry (horizontal) efficiency led productivity spillovers of FDI found valid in case of Indian drugs and pharmaceutical industry. Research limitations/implications The number of foreign firms is very less to imitate the significant impact of foreign investment on TFP growth of Indian pharmaceutical industry at aggregated level; and the Wang and Ho (2010) model is failing to capture direct impact of FDI on technological change under Malmquist framework. Practical implications Since, there exists dominance of domestic firms in Indian drugs and pharmaceutical industry, the planners should follow the policy which not only attract FDI but also benefit domestic firms; for example, developing modern infrastructure and institution which will further help domestic firms to absorb spillovers provided by the Multinational Corporations and also accelerate the growth and development of the economy. Social implications In no case, the foreign firms should dominate the market share otherwise the efficiency spillover effect will be negative and the domestic firms will be destroyed under the self-centric approach of foreign firms protected by the recent patent laws. Originality/value The study is a unique attempt to discuss the production structure and sources of TFP spillovers of FDI in Indian drugs and pharmaceutical industry with such a wide coverage of 304 firms over a period of 16 years under Wang and Ho (2010) model’s framework. The existing studies on TFP spillovers are using either a small sample size of firms or based upon traditional techniques of measuring spillover effects.

scholarly journals Dynamic Causal Relationships among GDP, Exports, and Foreign Direct Investment (FDI) in the Developing Countries

2013 ◽  
Vol 14 ◽  
pp. 1-19 ◽  
Author(s):  
Mohsen Mehrara ◽  
Amin Haghnejad ◽  
Jalal Dehnavi ◽  
Fereshteh Jandaghi Meybodi
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Strong Evidence ◽  
Direct Investment ◽  
The Other ◽  
Fdi Inflows ◽  
Long Run ◽  
Short Run ◽  
Growth Hypothesis

Using panel techniques, this paper estimates the causality among economic growth, exports, and Foreign Direct Investment (FDI) inflows for developing countries over the period of 1980 to 2008. The study indicates that; firstly, there is strong evidence of bidirectional causality between economic growth and FDI inflows. Secondly, the exports-led growth hypothesis is supported by the finding of unidirectional causality running from exports to economic growth in both the short-run and the long-run. Thirdly, export is not Granger caused by economic growth and FDI inflow in either the short run or the long run. On the basis of the obtained results, it is recommended that outward-oriented strategies and policies of attracting FDI be pursued by developing countries to achieve higher rates of economic growth. On the other hand, the countries can increase FDI inflows by stimulating their economic growth.

Investigation of the Foreign Direct Investment and Environmental Pollution Nexus for Developing Countries

2021 ◽  
pp. 320-338
Author(s):  
Orkun Çelik ◽  
Özge Korkmaz ◽  
Zafer Adalı
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Environmental Pollution ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Cointegration Test ◽  
Annual Data ◽  
Pollution Haven ◽  
Panel Cointegration Test

In theory, the foreign direct investment and environmental pollution nexus is explained by three hypotheses. Firstly, pollution haven hypothesis assumes that there is a positive nexus between these variables. Secondly, pollution halo hypothesis supposes that there is negative connection between these variables. Lastly, neutrality hypothesis asserts the non-existence of the connection between these variables. In recent years, many researchers have frequently tested whether these hypotheses are valid for different countries. In this study, applying Westerlund panel cointegration test, the authors aim to explore the nexus between foreign direct investment and environmental pollution for 23 developing countries after global crisis. For this aim, they use annual data covering the period 2009-2019. According to the obtained empirical findings, the presence of the long-term nexus between foreign direct investment and environmental pollution is not detected for 23 developing countries. Accordingly, the authors can say that there is neutrality hypothesis.

scholarly journals Determinants Of Foreign Direct Investment: The Case Of Emerging Markets

2016 ◽  
Vol 32 (4) ◽  
pp. 1033-1040
Author(s):  
Houssem Rachdi ◽  
Mariem Brahim ◽  
Khaled Guesmi
Keyword(s):  
Foreign Direct Investment ◽  
Emerging Markets ◽  
Direct Investment ◽  
Structural Breaks ◽  
Panel Cointegration ◽  
Real Effective Exchange Rate ◽  
Cross Sectional ◽  
Long Run ◽  
Effective Exchange ◽  
Effective Exchange Rate

This paper aims to investigate the relationship between Determinants of Foreign Direct Investment (FDI) inflows and their determinants in 68 Emerging Markets between1984-2011. This paper uses a panel cointegration technique of Pedroni (1999, 2004) and Westerlund and Edgerton (2008) considering both structural breaks and cross-sectional dependence. Cointegration results indicate that there exists a positive long-run relationship between economic growth, openness and FDI and a negative long-run relationship between inflation, real effective exchange rate and FDI.

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