An empirical analysis among foreign direct investment, trade openness and economic growth: evidence from the Indian economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Reenu Kumari ◽  
Malik Shahzad Shabbir ◽  
Sharjeel Saleem ◽  
Ghulam Yahya Khan ◽  
Bilal Ahmed Abbasi ◽  
...  
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Trade Openness ◽  
Series Data ◽  
Fdi Inflows ◽  
Content Type ◽  
Study Results

PurposeThis study examines the long-term and causal relationship among foreign direct investment (FDI) inflows, trade openness and economic growth from India.Design/methodology/approachThis study has used annual time series data from the period 1985–2018 and applied the Johansen cointegration and vector autoregression (VAR) model.FindingsThe results of Johansen's cointegration confirm no long-term relationship among all the above three variables. Further, the results of VAR Granger causality indicate that FDI causes economic growth and economic growth causes FDI, which confirms the bi-directional causality. In contrast, this study found that there is no bi-directional causality between trade openness and economic growth.Social implicationsThrough this study, the government could take the decisions related to foreign investment after adopting more trade openness because the study results revealed that if India follows more trade openness, then how FDI will flow (upward and downward). With impulse analysis, researchers, government and policymakers take the decision-related FDI inflows for the forthcoming ten years after 2018.Originality/valueThis study has found the most exciting results from the impulse functions of FDI inflows, trade openness and economic growth, which showed the situation of these three variables as increase and decrease in the forthcoming ten years.

Effects of Infrastructure Development on Foreign Direct Investment in Kenya

2016 ◽  
Vol 8 (2) ◽  
pp. 93-110 ◽  
Author(s):  
Carol Teresa Wekesa ◽  
Nelson H. Wawire ◽  
George Kosimbei
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Trade Openness ◽  
Transport Infrastructure ◽  
Series Data ◽  
Infrastructure Development ◽  
Fdi Inflows ◽  
Year 2000 ◽  
Quality Infrastructure

Kenya’s foreign direct investment (FDI) inflows as a percentage of GDP have been increasing negligibly over the last 4 years, increasing from 0.4 per cent in 2010 to 0.9 per cent in 2013. And yet evidence shows that quality infrastructure lowers the cost of doing business and thus attracts FDI. Kenya has visible signs of infrastructure inadequacy and inefficiencies despite the fact that since the year 2000, there has been increased budgetary allocation to the infrastructure sector. This study, therefore, sought to determine the effects of transport, energy, communication and water and waste infrastructure development on FDI inflows in Kenya. The study used annual time series data sourced from Central Bank of Kenya, World Bank and the United Nations Conference on Trade and Development (UNCTAD). Using multiple regression analysis, it was established that improved transport infrastructure, communication infrastructure, water and waste infrastructure, exchange rate, economic growth and trade openness are important determinants of FDI inflows into Kenya. Hence, for Kenya to attract more FDI, continued infrastructural development is key since quality infrastructure affords investors a conducive investment climate in which to operate.

scholarly journals FDI and long-term economic growth in Egypt

2017 ◽  
Vol 13 (1) ◽  
pp. 65-74
Author(s):  
Saif Alhakimi
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Government Expenditure ◽  
Wage Structure ◽  
Series Data ◽  
The Impact

This research paper aims to empirically analyze the impact of FDI on the long-term economic growth of Egypt. An empirical model was developed to explain the aggregate output, including total labor force, capital stock, foreign direct investment, government expenditure, and the real exchange rate. Annual time-series data from 1990–2013 were then used to estimate the model. Prior to calculating this estimation, the properties of the time series were diagnosed, and an error-correction model was developed and assessed. The overall results suggest that foreign direct investment makes a positive, yet weak and insignificant, contribution to the long-term economic growth of Egypt. This finding warrants further investigation to explore the possible reasons behind it, such as the degree of spillover that FDI has on economic growth and its impact on employment in areas like job creation, wage structure, research, and development.

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.

The Impact of Foreign Direct Investment (FDI) on Economic Growth (EG) : Evidence from Djibouti

2021 ◽  
Vol 9 (10) ◽  
pp. 701-706
Author(s):  
Nashwa Maguid Hayel
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
International Development ◽  
Direct Investment ◽  
Time Series Data ◽  
Developed Countries ◽  
Least Square ◽  
Series Data ◽  
Study Results ◽  
The Impact

Abstract: The achievement of EG and development is considered the core objective for both Developing Countires (DCs) and Least Developed Countries (LDCs), so countries try to get adequate funding to achieve this goal through optimal macroeconomic policies and different strategies. Countries prefer other mechanisms with less burden and cost to achieve economic growth, such as FDI flows. International development-oriented institutions such as WB and IMF recommend and consider FDI flows are the most important factors of the modern technology transfer, management, and know-how, which is necessarily needed in the local investment projects in poor countries, so FDI represents optimal external sources of growth. The objective of this study is to explain the impact of FDI on the EG of Djibouti. To achieve this objective the study used a secondary annual time series data for the period 1985-2019 by the method of Ordinary Least Square (OLS). The study results showed that FDI in the case of Djibouti tends to be statistically insignificant effects and a limited impact on Djibouti‘s EG, Moreover,other factors such as the Human Development Index(HDI), and Gross Fixed Capital Formation(GFCF), Trade Openness(TOP) shows significant effects on the Gross Domestic Product (GDP). Finally, the Consumer Price Index (CPI) has no significance in the EG of Djibouti. The findings provide critical information to Djibouti policy decision-makers to make an informed decision with regard to attracting investment sectors and policies in encouraging foreign investors to invest in the country. KEYWORDS: Foreign Direct Investment, Economic Growth, Djibouti, Empirical Analysis.

scholarly journals The Impact of Foreign Direct Investment on Economic Growth in Nigeria

2015 ◽  
Vol 7 (4) ◽  
pp. 90-97
Author(s):  
Sani Ali Ibrahim
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Empirical Studies ◽  
Trade Openness ◽  
National Income ◽  
Series Data ◽  
Long Run ◽  
The Impact

The economic development performance can be used to measure the economic growth of a given country. In economic analysis, a country can attain economic growth through the growth in national income measurement. However, there were rigorous discussions on the role of foreign direct investment (FDI) on economic growth and continued to be a topic of discussion on the contemporary economy. This paper serves as an extension to the previous empirical studies on the issue by providing some evidence from time series data for the period 1971 to 2013 of Nigeria. The primary aim of this study is to analyze the impact of FDI on economic growth of Nigeria taking trade openness, Gross Fixed Capital Formation and human capital as control variables. To investigate the long run equilibrium relationship, Johansen and Juselius co-integration approach is analyzed, while the speed of adjustment in the short run is analyzed through the use of VECM method. In Nigeria, FDI, GFCF and HK have long run relationship with economic growth. However, the coefficient of ECM in Nigeria is statistically significant at 1% level of significance. Thus, 10.8% of the adjustment is achieved due to the correction of the adjustment speed in a year.

scholarly journals ANALISIS PENGARUH VARIABEL MAKRO EKONOMI TERHADAP INVESTASI ASING LANGSUNG (STUDY KASUS CHINA-INDONESIA).

2017 ◽  
Vol 6 (2) ◽  
pp. 103
Author(s):  
Ririn Martini Rezki ◽  
Yeniwati Yeniwati ◽  
Mike Triani
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Time Series Data ◽  
Least Square ◽  
Series Data ◽  
Short Term

This research to analyze the influence of macro economic variables impact on Chinese Foreign Direct Investment in Indonesia. The influence of China’s economic growth, Indonesia’s economic growth, interest rates, inflation and exchange rates against Foreign Direct Investment (FDI) China in Indonesia in the long term and short term. Type of this research is descriptive research, the secondary data use form time series data, from 2001Q1 – 2016Q4, taken  from agencies and related institution, the analysis using the Ordinary Least Square (OLS) and Error Correction Model (ECM) to see the influence in a long term and impact in the short term. This research show that Indonesia’s economic growth of China’s economic growth and inflation is have a significant effect in the long term Chinas’s FDI in Indonesia. Variable economic growth of Indonesia’s, interest rates, inflation, exchange rate in the short term influence China’s Foreign Direct Investment in Indonesia. How ever in the long term interest rates and exchange rate do not influence significantly, to China’s FDI in Indonesia.

Impact of Trade Openness, FDI, Exchange Rate and Inflation on Economic Growth: A Case Study of Pakistan

2014 ◽  
Vol 1 (1) ◽  
pp. 236 ◽  
Author(s):  
Sadia Bibi ◽  
Syed Tauqeer Ahmad ◽  
Hina Rashid
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Time Series Data ◽  
Negative Impact ◽  
Trade Openness ◽  
Least Square ◽  
Series Data ◽  
Trade Surplus

This study focuses on empirical analysis to find out the role of trade openness, inflation, imports, exports, real exchange rate and foreign direct investment in enhancing economic growth in Pakistan. The analysis based on time series data for the period 1980 to 2011. This paper uses ADF; PP and DF-GLS tests to find out stationarity of the variables and Co-integration and DOLS (Dynamic Ordinary Least Square) techniques have been used for the estimation. Co integration results indicated the long run relationship among the variables. However, negative impact of trade openness can be overcome by producing import substitutes and creating conditions for trade surplus. Furthermore, foreign direct investment and trade are considered vital elements that improve the influence of economic growth.  

scholarly journals Impact of Taxation on Foreign Direct Investment: Empirical Evidence from Pakistan

2021 ◽  
Vol 9 (1) ◽  
pp. 10-18
Author(s):  
Muhammad Nouman Shafiq ◽  
Liu Hua ◽  
Muhammad Azhar Bhatti ◽  
Seemab Gillani
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Developing Economies ◽  
Trade Openness ◽  
Vital Role ◽  
Series Data ◽  
Fdi Inflows ◽  
Distributed Lag ◽  
The Government

Foreign direct investment plays a vital role in promoting economic growth, especially for developing economies. It causes improvement in the different sectors such as education, healthcare, manufacturing industries, and creates more jobs. The speed of FDI inflows has been increasing in Pakistan each year. In order to attract more FDI, many countries try to reframe their tax policies by introducing different tax incentives such as tax holidays, investment allowances, exemptions, deductions etc. The purpose of the present paper is to find the implication of taxation in the decision of FDI inflows in Pakistan. Time series data is used spanning over 1985 to 2020. The data was obtained from two sources: the “World Development Indicator” (WDI) and “Economic Survey of Pakistan”. “Auto-Regressive Distributed Lag” (ARDL) and “Error Correction Model” (ECM) techniques are used for empirical analysis. The study concludes that low taxes motivate foreign investors' investment contribution and the long-run relationship between taxes and FDI in Pakistan. Other control variables, including GDP growth, trade openness and exchange rate, positively impact FDI. It is suggested that decision-makers should direct policies to reduce the taxes to welcome FDI in Pakistan. In this regard, the government needs to reconsider its priorities while making policies favouring FDI.

The Impact of Foreign Direct Investment on the Economic Growth in Cambodia: Empirical Evidence

2018 ◽  
Vol 4 (5) ◽  
pp. 31-38 ◽  
Author(s):  
Khun Sokang
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Correlation Matrix ◽  
Direct Investment ◽  
Time Series Data ◽  
Positive Impact ◽  
Series Data ◽  
Fdi Inflows ◽  
Analysis Techniques ◽  
The Impact

The foreign direct investment (FDI) inflows are often seen as an important catalyst for economic growth in developing countries. This study aims to investigate the impact of FDI on the economic growth of Cambodia by utilizing the time series data throughout 2006-2016. The correlation matrix and multiple regression analysis techniques were used to analyze the collected data. The results of the study reveal that FDI has a positive impact on the economic growth of Cambodia. The study recommends that government should bring reforms in the domestic market to attract more FDI in Cambodia.

Foreign Direct Investment in the Make in India Era

2021 ◽  
pp. 474-479
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Trade Openness ◽  
Fdi Inflows ◽  
Dummy Variable ◽  
The Government ◽  
Long Term Impact

The present study attempted to examine the recent effects of FDI on India's economic growth in the Make in India initiative (MII) launched by the government. The trends of FDI inflows in India showed that when the CAGR of FDI inflows was -2.78 percent from 2008 to 2014 (pre-Make in India), the CAGR of FDI inflows was 8.54 percent between 2014 to 2020 (Post-Make in India). Further, the OLS results showed that the variables such as FDI inflows, trade openness, and exchange rate significantly impact India's economic growth. The dummy variable that stood for the Make in India initiative had a statistically significant impact on growth. The predictions about FDI inflows showed an upward trajectory since 2021-2022, which suggested that India may have further scope to attract more FDI into the country if they continue to do reforms like before and enhance competitiveness, and FDI may have a long-term impact on GDP.

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