INVESTMENT ABROAD AND IMPACT AT HOME: A LITERATURE REVIEW

2019 ◽  
Vol 19 (04) ◽  
pp. 1930001
Author(s):  
VISHAL SARIN ◽  
SURESH KUMAR
Keyword(s):  
Economic Growth ◽  
Multinational Corporations ◽  
Direct Investment ◽  
Empirical Studies ◽  
Significant Rise ◽  
Empirical Literature ◽  
Domestic Investment ◽  
Outward Fdi ◽  
Economic Activities ◽  
The Impact

Recently, there has been a significant rise in the volume and significance of FDI flows. The foreign direct investment (FDI), which is undertaken by multinational corporations, affects not only the host economy but also the home economy in many ways. The impact of FDI on host economy has been very well explained by several researchers. But there is lack of literature that has investigated the impact of FDI on the economy of the investing country. The purpose of this paper is to revisit the empirical studies which are related with exploring the impact of outward FDI on various economic activities such as exports, domestic investment, productivity and economic growth in the investing country. In this pursuit, a through survey of empirical literature in this area, published since 1980 across different journals has been made and presented.

Empirical Literature on Economic Growth, 1991–2020: Uncovering Extant Gaps and Avenues for Future Research

2021 ◽  
pp. 097491012110616
Author(s):  
Natalia I. Doré ◽  
Aurora A. C. Teixeira
Keyword(s):  
Economic Growth ◽  
Latin American ◽  
Empirical Studies ◽  
Empirical Literature ◽  
Future Research ◽  
Long Run ◽  
Scientific Attention ◽  
The Impact ◽  
Determinants Of Economic Growth ◽  
Latin American And Caribbean

The factors required to achieve sustainable economic growth in a country are debated for decades, and empirical research in this regard continues to grow. Given the relevance of the topic and the absence of a comprehensive, systematic literature review, we used bibliometric techniques to examine and document several aspects in the empirical literature related to growth, from 1991 to 2020. Five main results are worth highlighting: (a) the share of empirical articles on economic growth show a clear upward trend; (b) among all the groups of countries considered, the emerging economies (EEs) have received the most scientific attention; (c) the economic growth processes of the Latin American and Caribbean EEs have observed negligible scientific attention; (d) the very long-run studies comprise a residual share among the empirical literature on growth; (e) the extant empirical studies on economic growth have addressed mainly the impact of “macroeconomic conditions.” Our findings suggest there is a need to redirect the empirical growth agenda, so as to encourage more scientific attention devoted to the analysis of key determinants of economic growth in the very long run. There should also be increased scrutiny of the processes of economic growth in Latin American and Caribbean EEs

scholarly journals Equity Investments vs. Debt Investments – What Drives OFDI in Polish Industry

2015 ◽  
Vol 16 (1) ◽  
pp. 65-81
Author(s):  
Agnieszka Kłysik-Uryszek
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Theoretical Background ◽  
Significant Rise ◽  
Empirical Literature ◽  
International Expansion ◽  
Outward Fdi ◽  
Industrial Companies ◽  
Equity Investments ◽  
Polish Economy

AbstractPolish economy witnessed enormous changes over the past 25 years. Systematic economic growth, increasing market openness, legal stabilization and integration with EU have substantially improved Poland’s global competitive position. That is reflected, among others, in intensified flows of long-term capital in the form of foreign direct investment (FDI). What is worth stressing, the last decade (regardless the economic crisis) brought a significant rise of investments made by Polish companies abroad (Outward FDI). It should be mentioned however, that the FDI flows are usually analyzed (in both theoretical and empirical literature) as if they consist only of equity investments, when in fact they consist also of intracompany loans. As the latter may not be driven by the same factors as equity flows, the real structure of FDI flows should be taken into consideration while evaluating the investment potential of companies. The paper examines selected issues concerning international expansion of Polish companies in the form of foreign direct investment. It provides theoretical background of the problem, explores the reasons for expansion and presents the structure of foreign direct investment by Polish industrial companies in the period 2003-2012 with regard to the equity and debt components of the flows. The study is based on the data provided by the National Bank of Poland (NBP).

EMPIRICAL STUDIES ANALYZING THE DYNAMIC EFFECTS OF CHANGES IN PUBLIC EXPENDITURE AND TAXATION ON ACTIVITY

2018 ◽  
Vol 28 (5) ◽  
pp. 1641-1646
Author(s):  
Mahije Mustafi ◽  
Sulbije Memeti Karemani
Keyword(s):  
Economic Growth ◽  
Fiscal Policy ◽  
Economic Activity ◽  
Empirical Studies ◽  
Empirical Literature ◽  
Budget Deficits ◽  
Dynamic Effects ◽  
Macroeconomic Impact ◽  
The Business Cycle ◽  
The Impact

This paper analyzes the empirical literature that examines the effects of fiscal policy shocks on economic activity. Discussion related to fiscal policy is related to the impacts on economic growth is quite current, because the development of appropriate fiscal instruments can lead to steady and sustainable economic growth in the countries. The role of fiscal policy and the impact on economic activity are among the most controversial issues among academics and policymakers. In the absence of any "active" intervention in government expenses, tax revenues move automatically with the economic cycle. I can also say that government transfers can be considered as help for the unemployed, they grow as the economy slows down and unemployment rises, while labor tax returns, capital and consumption flows are declining. Resistive actions occur when the business cycle improves. In recent years, empirical studies have shown that private consumption and GDP have increased significantly, while government expenses have been severely reduced. Most empirical evidence suggests that fiscal expansion increases production and consumption and worsens the trade balance.The Kenzie and Neoclassical schools have different views on the impact of public spending on economic activity. This study has completed a detailed review of many important, relevant scientific havepapersthat empirically document these impacts. As a conclusion, we can state that although the fiscal policy theory is well developed, until recently has not received much attention from the (applied) economic practice. The first category is aimed at assessing macroeconomic impact from major reductions in the budget deficit, and the second study, in general, analyzes the stabilizing capabilities of fiscal policy variables. According to Blanchard and Perotti, the dynamic effects of the discretionary fiscal policy of macroeconomic variables have recently focused on the omissions of autoregressive vectors (2002). Some empirical studies have found a link between budget deficits, money growth and inflation, both in industrialized economies as well as in growing economies. For industrial economies most of these studies have come to the conclusion that there is little evidence that government debt affects the growth of money and inflation. In developing countries, it is often argued that high inflation is realized when governments face large and ongoing deficits financed by money emission. A change in taxes or public expenses (the so-called “fiscal shocks”) at any time prevents their development.

scholarly journals Investment and Economic Growth: An Empirical Analysis for Tanzania

2016 ◽  
Author(s):  
Manamba Epaphra ◽  
John Massawe
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Life Expectancy ◽  
Direct Investment ◽  
Public Investment ◽  
Private Investment ◽  
Domestic Investment ◽  
Control Variables ◽  
Lm Test ◽  
The Impact

This paper analyzes the causal effect between domestic private investment, public investment, foreign direct investment and economic growth in Tanzania during the 1970-2014 period. The modified neo-classical growth model that includes control variables such as trade liberalization, life expectancy and macroeconomic stability proxied by inflation is used to estimate the impact of investment on economic growth. Also, the economic growth models based on Phetsavong and Ichihashi (2012), and Le and Suruga (2005) are used to estimate the crowding out effect of public investment on private domestic investment on one hand and foreign direct investment on the other hand. A correlation test is applied to check the correlation among independent variables, and the results show that there is very low correlation suggesting that multicollinearity is not a serious problem. Moreover, the diagnostic tests including RESET regression errors specification test, Breusch-Godfrey serial correlation LM test, Jacque-Bera-normality test and white heteroskedasticity test reveal that the model has no signs of misspecification and that, the residuals are serially uncorrelated, normally distributed and homoskedastic. Generally, the empirical results show that the domestic private investment plays an important role in economic growth in Tanzania. FDI also tends to affect growth positively, while control variables such as high population growth and inflation appear to harm economic growth. Results also reveal that control variables such as trade openness and life expectancy improvement tend to increase real GDP growth. Moreover, a revealed negative, albeit weak, association between public and private investment suggests that the positive effect of domestic private investment on economic growth reduces when public investment-to-GDP ratio exceeds 8-10 percent. Thus, there is a great need for promoting domestic saving so as to encourage domestic investment for economic growth.

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 The impact of ODA in constructing road traffic infrastructure on Vietnam’s economic growth

2021 ◽  
pp. 99-106
Author(s):  
Thanh Cuong Dang ◽  
Dang Bang Nguyen ◽  
Thi Hang Trinh ◽  
Thi Thao Banh ◽  
Thi Thu Cuc Nguyen
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Road Traffic ◽  
Positive Impact ◽  
Road Transport ◽  
Assessment Model ◽  
Transport Infrastructure ◽  
Domestic Investment ◽  
The Impact

The study examines the impact of official development assistance (ODA) in constructing road transport infrastructure on Vietnam’s economic growth. The authors select gross domestic product (GDP) to represent economic growth and test the influence of ODA in constructing road traffic infrastructure on Vietnam's GDP. Based on the references and analysis of previous studies, the authors propose an impact assessment model of ODA in constructing road transport infrastructure, Foreign direct investment (FDI), Domestic Investment (VDT) and Labor Force (Labor) to economic growth through GDP as a dependent variable. The regression results show that the ODA had a positive impact on GDP. Moreover, ODA plays an important role in constructing road transport infrastructure on Vietnam’s economic growth.

On the foreign direct investment–economic growth relationship in Africa: does economic freedom mediate this relationship?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olufemi Adewale Aluko ◽  
Muazu Ibrahim ◽  
Xuan Vinh Vo
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Economic Freedom ◽  
Empirical Literature ◽  
African Countries ◽  
Content Type ◽  
Economic Freedom Index ◽  
Bootstrap Algorithm ◽  
The Impact

PurposeIn this study, the authors examine how economic freedom mediates the impact of foreign direct investment (FDI) on economic growth in Africa.Design/methodology/approachBy using data from 41 countries over the period 2000–2017, the authors invoke Seo and Shin's (2016) sample splitting approach while relying on the recently developed Seo et al.'s (2019) computationally robust bootstrap algorithm to achieve the purpose of this study.FindingsThe authors find evidence of economic freedom threshold that bifurcates the link between FDI and economic growth in Africa. More precisely, FDI does not improve overall economic growth for African countries whose economic freedom index is below the estimated threshold while significantly spurring growth for African countries with economic freedom above this threshold.Practical implicationsAfrican countries need to strive towards improving their level of economic freedom through the strengthening of rule of law, reducing government size, promoting regulatory efficiency and further opening of the goods and capital markets.Originality/valueThe association between FDI and economic growth has been well documented. While the positive theoretical postulations are almost conclusive, empirical literature on the precise effect of FDI remains contentious and far from being settled. What is missing in the existing literature in Africa is whether countries' level of economic freedom mediates how FDI explains the variations in economic growth across African countries. The authors fill this research gap.

The Impact of Urbanization Induced Foreign Direct Investment in Emerging India

2018 ◽  
pp. 309-326
Author(s):  
Sharmiladevi J. C.
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Regression Analysis ◽  
Multiple Regression Analysis ◽  
Emerging Economies ◽  
Direct Investment ◽  
Economic Activities ◽  
Impact Of Urbanization ◽  
The Impact ◽  
Insight Into

Globalization accompanied with internationalization enhanced urbanization across the globe. Cities and towns became the central point for economic activities, most of them fueled by the inward flow of Foreign Direct Investment (FDI) especially in the emerging economies. Globalization initiated urbanization in most of the emerging economies. As an outcome of globalization directly and with urbanization indirectly it resulted in the growth of inward foreign direct investment across the globe. This chapter makes an attempt to identify the influence of urbanization upon inward FDI and economic growth for emerging India. To study this phenomenon, data for a period of twenty years were taken from 1990- 2010. Multiple regression analysis was used. Results of the study are significant and indicate that, urbanization is playing an important role in enhancing the inflow of FDI into India in the study period. 66.9% of the changes in the dependent variable that is inward FDI is explained jointly by urbanization and economic growth, which shows that cities and towns are becoming an integral part in receiving FDI. This chapter also add some insight into the changing consumption and lifestyles of urbanites effected due to FDI.

The relationships between foreign direct investment, domestic savings, domestic investment, and economic growth: The case of Sub-Saharan Africa

2016 ◽  
Vol 38 (2) ◽  
pp. 193-217
Author(s):  
Nurudeen Abu ◽  
Mohd Zaini Abd Karim
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Direct Investment ◽  
Sub Saharan Africa ◽  
Domestic Investment ◽  
Long Run ◽  
Domestic Savings ◽  
Sub Saharan ◽  
The Impact

Despite the large body of research on foreign direct investment, domestic savings, domestic investment and economic growth, little has been done to investigate the relationships among them. This paper examines the relationships among foreign direct investment, domestic savings, domestic investment, and economic growth in 16 Sub-Saharan African (SSA) countries from 1981 to 2011, using various techniques. The results of VAR estimation and Granger causality tests demonstrate that there is a unidirectional causality from foreign investment to growth and domestic investment, savings to growth, and a bidirectional causality between growth and domestic investment as well as savings and domestic investment. The results of the variance decomposition analysis reveal that foreign investment exerts more influence on growth. Savings are more important in explaining domestic investment, growth is more important in explaining foreign investment, and domestic investment is more important in explaining savings. Based on the results of the impulse response analysis, there is a positive unidirectional causality from foreign investment to growth and domestic investment, savings to growth, and a positive bidirectional causality between savings and domestic investment, both in the short and long-run. Although there is feedback causality between domestic investment and growth, the impact from investment is negative in the short-run and positive in the long-run. Thus, policies that encourage foreign investment and savings are required to boost domestic investment and promote growth, and policies that raise domestic investment will lead to higher savings and growth in SSA.

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