scholarly journals Influence of Exchange Rate on Foreign Direct Investment Inflows: An Empirical Analysis Based on Co-Integration and Granger Causality Test

2021 ◽  
Vol 2021 ◽  
pp. 1-12
Author(s):  
Lan Tan ◽  
Yifan Xu ◽  
Alemayehu Gashaw
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Close Association ◽  
Causality Test ◽  
Fdi Inflows ◽  
The Exchange Rate

Although it is widely recognized that Foreign Direct Investment (FDI) inflows have a dominant effect on economic growth of host countries, the determinants of FDI inflows are still unclear. Especially, about the effect of exchange rate on FDI inflow, the results reached by scholars vary across countries or regions. It is of great practical and theoretical significance to explore the influencing effects of exchange rate on FDI inflow and identify the mechanisms that underlie them in close association with regional economic characters so as to help local government implement targeted government policies to achieve sustainable FDI inflow and sustainable economic growth. For this purpose, the influencing effects and the influencing mechanisms of the exchange rate on FDI inflows are investigated for Zhejiang province, China, over 1985–2019 by employing the co-integration tests, vector error correction models, Granger causality tests, and impulse response tests. Empirical results indicate that there are long-term stable and unidirectional causal relationship between the exchange rate and FDI inflow. Continuous appreciation of RMB against USD discourages FDI inflow. The mechanism which underlies the long-term relationship is the wealth effect, rather than the cost effect or the demand effect. By contrast, in the short run, neither the exchange rate nor the three influencing mechanism has a significant impact on FDI inflow. These results suggest policy recommendations for improving FDI by accumulating human capital and improving infrastructure. These findings are also applicable for other countries or regions with similar economic characters.

scholarly journals The Relationship between International Trade and Economic Growth

2019 ◽  
Vol 1 (02) ◽  
pp. 112-123
Author(s):  
Putri Dewi Purnama ◽  
Ming Hung Yao
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
International Trade ◽  
Exchange Rate ◽  
Direct Investment ◽  
Positive Impact ◽  
The Exchange Rate ◽  
Asean Countries ◽  
The Relationship

The aim of this study is to find the relationship between international trade and economic growth in ASEAN countries. Three independent variables used to measure the economic growth include international trade, the exchange rate, and foreign direct investment. This study employs a pedroni panel cointegration test to examine the data from 2004 to 2015. The results show that there is a long term cointegrated relationship between international trade and economic growth in the ASEAN countries. International trade and foreign direct investment also have a long term, positive impact on economic growth. Meanwhile, the exchange rate also has a long term, negative influence on the economic growth. In addition, there is an indirect relationship and bidirectional causalities between the GDP and international trade, as well as between the GDP and the exchange rate. On the other hand, there is a direct relationship and a bidirectional causality between international trade and the exchange rate. The FDI leads GDP, international trade, and exchange rates. Our results suggest that international trade must be supported by government policies that aim to enhance the financing of new investment for economic growth.

scholarly journals A Case Study of Foreign Direct Investment and Economic Growth Relationship in Turkey

2018 ◽  
Vol 1 (3) ◽  
pp. 97
Author(s):  
Mehman Karimov ◽  
Davit Belkania
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Knowledge Spillovers ◽  
Causality Test ◽  
Technology Transfers ◽  
Causality Tests

Foreign direct investment is believed to enhance long-term economic growth of a country through knowledge spillovers and technology transfers. This paper is an empirical attempt to check the effects of the foreign direct investment (FDI) on the economic growth (GDP) of Turkey. The paper uses time span from 1980 to 2017 for statistical analysis. Johansen co-integration and Granger causality tests were applied for empirical analysis. The results of the tests confirmed the presence of the co-integration between GDP and FDI as it was expected from the beginning. Furthermore, Granger causality test showed the unidirectional causality from FDI to GDP.

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.

scholarly journals Trade Openness and Economic Growth Nexus in Pakistan

2020 ◽  
Vol V (III) ◽  
pp. 22-33
Author(s):  
Ghulam Yahya Khan ◽  
Muhammad Masood Anwar ◽  
Aftab Anwar
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Trade Openness ◽  
Explanatory Variables ◽  
Integration Approach ◽  
Long Run

This study explores the nexus amongst trade openness and economic growth for Pakistan for 1981-2019. Trade-openness is a dependent variable, and it is measured as imports plus exports to GDP ratio. Economic growth, Foreign Direct Investment, Inflation, Exchange rate, and interest rate are taken as explanatory variables. Co-integration approach by Johansen and Juselius (1988, 1991) has been used for long-run relationships. Results indicate that Trade-Openness has significantly affected the economic growth and other control variables of the study for Pakistan. There exist bidirectional Granger Causality in the selected variables.

scholarly journals Examining the impact of Exports and Exchange rate on Economic Growth of Turkey

2020 ◽  
Author(s):  
Iftikhar Muhammad ◽  
Malik Shahzad Shabbir
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Economic Policies ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive ◽  
The Impact

Abstract Purpose This study intends to analyze the long-run and short-run relationships along with the identification of causal links between exports, economic growth, and exchange rate in Turkey. Data/Design: This study uses auto-regressive distributed lags (ARDL) and Granger causality over time series monthly data from the year 2010–2018. The results indicate that exports are significantly positively related to economic growth while the exchange rate is found to be negatively related to economic growth. Findings: Moreover, findings from the test of Granger causality indicate that a unidirectional causal association is found from exports to foreign direct investment and economic growth and from economic growth to foreign direct investment. The Granger causality results indicate that an increase in exports accelerates the economic growth of Turkey and a change in growth rate and exchange rate leads to a change in foreign direct investment. Originality of work: The overall findings suggest that exports should be promoted along with the liberal-investment economic policies to boost the overall economic growth in Turkey.

Dynamics of Economic Growth, Investment and Trade Openness: Evidence from Bangladesh

2017 ◽  
Vol 6 (1) ◽  
pp. 82-104 ◽  
Author(s):  
Champa Bati Dutta ◽  
Mohammed Ziaul Haider ◽  
Debasish Kumar Das
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Trade Openness ◽  
Jel Classification ◽  
Domestic Investment ◽  
Causality Test ◽  
Vector Error Correction ◽  
Causality Tests

This article investigates the causal relationship among foreign direct investment, domestic investment, trade openness and economic growth in Bangladesh over the period 1976–2014. Unit root tests, cointegration methods and Granger causality tests in Vector Error Correction Model (VECM) framework are used to investigate the relationships. The results of Granger causality test based on a stable VECM support a unidirectional causality running from foreign direct investment to growth, domestic investment to trade openness, growth to trade openness and bidirectional causality between domestic investment and growth and foreign direct investment and domestic investment. The results support the investment complementarities in Bangladesh. JEL Classification: E22, F1, O40

scholarly journals Impact of Foreign Direct Investment on Economic Growth of Nepal

2019 ◽  
Vol 33 (2) ◽  
pp. 73-80
Author(s):  
Shiva Prasad Pokharel ◽  
Bishnu Prasad Pokharel
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Gross Domestic Product ◽  
Granger Causality ◽  
Unit Root ◽  
Direct Investment ◽  
Unit Root Test ◽  
Granger Causality Test ◽  
Capital Formation ◽  
Causality Test

 This paper aims to investigate the impact of Foreign Direct Investment (FDI) on the economic growth of Nepal for the period 2008/09 to 2017/18 A.D. yearly data. It evaluated the Gross Domestic Product (GDP) performance and the trends of FDI and Gross Fix Capital Formation (GFCF) in Nepal. To demonstrate the relationship between Nepalese Gross Domestic Product (GDP) and Foreign Direct Investment (FDI) and Gross Fix Capital Formation (GFCF) Multiple-Regression-Model has been applied along with various econometrics techniques such as Unit-Root Test, Granger-Causality Test and Ordinary Least Square (OLS). GDP in this model is used as dependent variable whereas FDI and GFCF are measured as independent variables. According to the results, Unit Root Test indicated that all the variables included in the model were not stationary at level except FDI, whereas GDP and GFCF are stationary at first difference. The model is overall significant with the positive and significant relationship of GDP, FDI and GFCF. Result also indicate a good fit for the model with R2=86%. The Granger Causality Test revealed that there was no causality between the variables since all p-value obtained are more than 5%. Based on the empirical result of this paper, policy recommendation proposed that for Nepal to generate more foreign direct investment, hard work should be made at solving problems of government involvement in business; relative closed economy; corruption; weak public institutions; and poor external image, and political instability.

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.

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