Foreign Direct Investment, Exports and Long-term Economic Growth in Alabama: A Co-integration Analysis

2020 ◽  
pp. 097674792090626
Author(s):  
Sergio Castello ◽  
Anindya Biswas
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Gross Domestic Product ◽  
Direct Investment ◽  
Positive Relationship ◽  
Growth Path ◽  
Significant Evidence ◽  
Long Run ◽  
Integration Analysis

This article provides a state-specific co-integration study by linking exports and foreign direct investment (FDI) to economic growth in Alabama. The study aims to determine how much of Alabama’s economic growth is driven by exports. Mercedes-Benz and its announcement of a US$600 million investment in 1993 started a surge of FDI and exports never seen before in the state accelerating its long-run economic growth path. Twenty years later, Mercedes-Benz has invested over US$4.5 billion and can produce 300,000 vehicles per year. This study analyses the importance of exports and FDI in the Alabama economy and establishes significant evidence of the positive relationship between Total Gross Domestic Product for Alabama (ALNGSP) and its exports from 1999 to 2017, whereas it does not find a statistically significant impact of the FDI on Alabama’s growth. We conclude that Alabama needs to focus on three main policies to continue its economic success. First, it needs to continue to attract FDI in these sectors to build a vast supplier network. Second, Alabama must allocate new investments in infrastructure and finally, it needs to continue to be a friendly state to businesses, providing skilled labour, low corporate taxes and less bureaucracy. JEL: C82, L62, O51

The Causal Links Between Foreign Direct Investment And Economic Growth In Pakistan

2012 ◽  
Vol 6 ◽  
Author(s):  
Najid Ahmad ◽  
Muhammad Farhat Hayat ◽  
Muhammad Luqman ◽  
Shafqat Ullah
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Gross Domestic Product ◽  
Direct Investment ◽  
Domestic Product ◽  
Correction Model ◽  
Economic Progress ◽  
Long Run ◽  
Domestic Capital ◽  
The Relationship

This paper investigates the relationship between foreign direct investment and economic growth in Pakistan. The co-integration and error correction model is used to show the relationship between foreign direct investment and gross domestic product in Pakistan. Gross domestic product is taken as dependent variable while foreign direct investment, labor force and domestic capital as independent variables. The results suggest that there is a positive relation between foreign direct investment and gross domestic product in short as well as long run. If we want to make economic progress then there is a need to invite foreign investors because foreign direct investment increases GDP that is economic growth.

scholarly journals An Investigation of the Dynamic Effect of Foreign Direct Investment (FDI) and Interest Rates on GDP in South Africa

2018 ◽  
Vol 10 (5(J)) ◽  
pp. 29-37
Author(s):  
Thomas Habanabakize ◽  
Daniel F Meyer
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Direct Investment ◽  
South African ◽  
Significant Relationship ◽  
Direct Investment ◽  
Positive Relationship ◽  
Positive Impact ◽  
Long Run ◽  
Repo Rate

Economic growth in South Africa has been in the “doldrums” for the past decade. If well managed, foreign direct investment (FDI) and repo rate (interest rate) could have a positive impact and assist in rapid economic growth so urgently needed in South Africa. FDI has been a driving force for growth in many developing economies. Not enough has been done to attract FDI in South Africa. The country has enormous ability and capacity to attract FDI inflows and to have the advantages from it. A quantitative research approach was used to analyse the association amongst the variables which include FDI, GDP and repo rate in the South African economy. The South African Reserve Bank database was used and the period analysed is from 2000 to 2016. Statistical and econometric methods such as correlation analysis, unit root tests, ARDL Bounds test for cointegration, an error correction model (ECM), and the Granger causality tests were used. Subsequently, after the econometric model was estimated, findings indicated the existence of a long-run relationship between the three variables. While, a significant positive relationship exists between FDI and GDP, a negative long-run relationship was found between GDP and repo rate and interestingly a nonsignificant relationship between repo rate and FDI. In the short run, the positive effect of FDI on GDP is minimal whilst a significant and positive relationship exists between GDP and repo rate. The results did also show some limitations in the results, with regards to FDI and repo rate that there is no significant relationship between the variables, meaning that repo rate does not have an impact on FDIs. Although some long-run evidence was found of FDI playing a role in economic growth in South Africa, such impact is limited. Also very interesting is that the repo rate and FDI do not have a statistically significant relationship. This could be due to the rising risks associated with investments in the country. In conclusion, there are many variables which could have a positive impact on the attraction of FDIs and such factors will be explored further in future studies. 

scholarly journals How do Foreign Direct Investment and Growth Interact in India?

2015 ◽  
Vol 2 (2) ◽  
Author(s):  
Gurmeet Singh
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Gross Domestic Product ◽  
Granger Causality ◽  
Foreign Exchange ◽  
Direct Investment ◽  
Foreign Exchange Reserves ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Short Run

The study investigates the relationships between the FDI and economic growth, namely, Gross Domestic Product, exports and foreign exchange reserves over the period 1994 to 2013. Johansen’s co-integration and vector error correction model have been applied to explore the long-run equilibrium relationship between foreign direct investment and economic growth. The analysis reveals that economic growth and the foreign direct investment are co-integrated and, hence, a long-run equilibrium relationship exists between them. It is observed that the foreign direct investment is positively related to gross domestic product and foreign exchange reserves but negatively related to exports. Exports are found to be insignificant in determining FDI. In the Granger causality sense, FDI causes GDP in both long run and short-run. No bidirectional causality is observed between any variables under study. Furthermore, the findings of VECM and Granger Causality test show that FDI creates a long run relationship with economic growth but in short run no causality is found between FDI, exports and foreign exchange reserves.

scholarly journals The Relationship Between Foreign Direct Investment Oriented Economic Growth in Uganda: An Empirical Study Based on VAR Model

2021 ◽  
Author(s):  
Nabyonga Barbra ◽  
Hina Nawaz
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Var Model ◽  
Vector Autoregressive Model ◽  
Causality Test ◽  
Vector Autoregressive ◽  
Long Run ◽  
The Relationship

The purpose of this paper is to investigate the relationship between Foreign Direct Investment (FDI) and Economic growth as measured by Gross Domestic Product (GDP) over Uganda, from 1980-2018. Vector Autoregressive Model (VAR) and Granger Causality test were used. The results show thatlag 1 is the optimal lag hence bivariate VAR (1) model was used. GDP and FDI exhibits long-term equilibrium since the two-time series are cointegrated in long run. The causality test indicates that there exists a unilateral relationship between FDI and GDP, and FDI causes GDP growth and not vice versa. Understanding these causality links can help in future forecasting of Uganda's economic growth.

scholarly journals THE ROLE OF TAX REVENUE AND FOREIGN DIRECT INVESTMENT IN PROMOTING ECONOMIC PROGRESS IN NIGERIA

10.26458/1932 ◽  
2019 ◽  
Vol 19 (3) ◽  
pp. 33-54
Author(s):  
Fineboy Ikechi JOSEPH ◽  
Cordelia Onyinyechi OMODERO ◽  
Manasseh Obioma OMEONU
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Gross Domestic Product ◽  
Direct Investment ◽  
Positive Relationship ◽  
Domestic Product ◽  
Tax Revenue ◽  
P Value ◽  
Regression Result ◽  
The Impact

AbstractThe study examined the impact of tax revenue on economic growth of Nigeria proxied as gross domestic product (GDP) from 2000-2017). The study employed Exploratory and ex-post facto designs and secondary data sourced from Federal Inland Revenue Services (FIRS), UNCTAD, FDI/MNE database, World Bank Report, United Nations Development Programme (UNDP) reports, CBN statistical bulletin were used. Ordinary Least Squares (OLS) regression technique was adopted to test the hypotheses of the study. The result reveals that tax revenue has significant impact on GDP in Nigeria with R-squared showing that about 87% variations in GDP can be attributed to tax revenue, while the remaining 23% variations in GDP are caused by other factors not included in this model. This is further emphasized by the T-statistic p-value of 0.001 which shows that the regression result is statistically significant because it is less than 5%, level of significance adopted for this study. The result from regression analysis also revealed that there is positive relationship between foreign direct investment and Gross Domestic Product, with a p- value of + 0.000, + 0.001 < 0.05% significance level. The study concluded that tax revenue has a significant impact on GDP in Nigeria. Also there is a positive relationship between FDI and economic growth in Nigeria; therefore the more FDI increases the more economic growth. The study recommended that functional tax structures that would ensure that tax is collected from all taxable individuals, group of individuals and corporate bodies and remitted accordingly to the government without diversion should be instituted to widen the revenue base of the country. Government should liberalize the Nigerian economy the more by removing all barriers to trade such as arbitrary tariffs, import and export duties and other levies to encourage foreign investors.

scholarly journals The Relationship Between Foreign Direct Investment Oriented Economic Growth in Uganda: An Empirical Study Based on VAR Model

2021 ◽  
Vol 4 (3) ◽  
Author(s):  
Nabyonga Barbra ◽  
◽  
Hina Nawaz
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Var Model ◽  
Vector Autoregressive Model ◽  
Causality Test ◽  
Vector Autoregressive ◽  
Long Run ◽  
The Relationship

The purpose of this paper is to investigate the relationship between Foreign Direct Investment (FDI) and Economic growth as measured by Gross Domestic Product (GDP) over Uganda, from 1980-2018. Vector Autoregressive Model (VAR) and Granger Causality test were used. The results show thatlag 1 is the optimal lag hence bivariate VAR (1) model was used. GDP and FDI exhibits long-term equilibrium since the two-time series are cointegrated in long run. The causality test indicates that there exists a unilateral relationship between FDI and GDP, and FDI causes GDP growth and not vice versa. Understanding these causality links can help in future forecasting of Uganda's 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 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.

scholarly journals ANALISIS PENGARUH REMITANSI, INVESTASI ASING LANGSUNG, IMPOR DAN PERTUMBUHAN EKONOMI DI INDONESIA

2020 ◽  
Vol 2 (4) ◽  
Author(s):  
Regina Septriani Putri ◽  
Ariusni Ariusni
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Positive Impact ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
Positive Effect

Abstract : This study examined and analysis the effect of remittances, foreigndirect investment, imports, and economic growth in Indonesia in the long run andshort run. This study using Error Correction Model (ECM) method and using theannual time series data from 1989 to 2018. This study found that: (1) remittancehave an insignificant positive effect on economic growth in the long run and shortrun,(2)foreign direct investment have a significant positive impact on economicgrowth in the long run and short run, (3) import have an insignificant positiveimpact on economic growth both in the long run and short run. To increase theeconomic growth in the future, this study suggests the government to decresingimports of consume goods and increasing the inflow of capital goods, rawmaterial goods, remittances and foreign direct investment.Keyword : Remittance, Foreign Direct Investment, Import, Economic Growth andECM

scholarly journals A time series analysis of determinants of FDI in Afghanistan: Which one matters the most, security or economic growth?

2018 ◽  
Vol 6 (2) ◽  
pp. 19
Author(s):  
Abdul Fareed Delawari
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Direct Investment ◽  
Time Series Analysis ◽  
Direct Investment ◽  
Economic Factors ◽  
Market Economic ◽  
The Government ◽  
The Relationship

Afghanistan has been practicing market economic system since 2002. Since then, the government has been initiating different policies and announced various incentives to attract foreign direct investment (FDI) to the country. However, the outcome has not been satisfactory due to several political and economic factors. This paper explores the relationship between security, economic growth and FDI in Afghanistan, using ARDL model. The paper covers a period from 2002 to 2016. The empirical results of this study show that there is a negative long-term relationship between security and FDI. Hence,  the author concludes that, to attract FDI to the country, insuring security should be the top priority of the government of Afghanistan.

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