Foreign Direct Investment and Growth Symbiosis: A Semiparametric System of Simultaneous Equations Analysis

2017 ◽  
Vol 7 (1) ◽  
Author(s):  
Nadine McCloud ◽  
Michael S. Delgado ◽  
Subal C. Kumbhakar
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Panel Data ◽  
Direct Investment ◽  
Developing Economies ◽  
Institutional Quality ◽  
Simultaneous Equations ◽  
Asymptotically Normal ◽  
Methodological Tool

AbstractWe characterize the types of interactions between foreign direct investment (FDI) and economic growth, and analyze the effect of institutional quality on such interactions. To do this analysis, we develop a class of instrument-based semiparametric system of simultaneous equations estimators for panel data and prove that our estimators are consistent and asymptotically normal. Our new methodological tool suggests that across developed and developing economies, causal, heterogeneous symbiosis and commensalism are the most dominant types of interactions between FDI and economic growth. Higher institutional quality facilitates, impedes or has no effect on the interactions between FDI and economic growth.

scholarly journals Impact of foreign direct investment, remittances and official development assistance on economic growth: panel data approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amna Zardoub ◽  
Faouzi Sboui
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Panel Data ◽  
Direct Investment ◽  
Development Assistance ◽  
Business Environment ◽  
Official Development Assistance ◽  
Financial Flows ◽  
Content Type

PurposeGlobalization occupies a central research activity and remains an increasingly controversial phenomenon in economics. This phenomenon corresponds to a subject that can be criticized through its impact on national economies. On the other hand, the world economy is evolving in a liberalized environment in which foreign direct investment plays a fundamental role in the economic development of each country. The advent of financial flows – FDI, remittances and official development assistance – can be a key factor in the development of the economy. The subject of this article is to analyses the effect of financial flows on economic growth in developing countries. Empirically, different approaches have been employed. As part of this work, an attempt was made to use a panel data approach. The results indicate ambiguous effects and confirm the results of previous work.Design/methodology/approachThe authors seek to study the effect of foreign direct investment, remittances and official development assistance (ODA) and some control variables i.e. domestic credit, life expectancy, gross fixed capital formation (GFCF), inflation and three institutional factors on economic growth in developing countries by adopting the panel data methodology. Then, the authors will discuss empirical tests to assess the econometric relevance of the model specification before presenting the analysis of the results and their interpretations that lead to economic policy implications. As part of this work, the authors have rolled panel data for developing countries at an annual frequency during the period from 1990 to 2016. In a first stage of empirical analysis, the authors will carry out a technical study of the heterogeneity test of the individual fixed effects of the countries. This kind of analysis makes it possible to identify the problems retained in the specific choice of econometric modeling to be undertaken in the specificities of the panel data.FindingsThe empirical results validate the hypotheses put forward and indicate the evidence of an ambiguous effect of financial flows on economic growth. The empirical findings from this analysis suggest the use of economic-type solutions to resolve some of the shortcomings encountered in terms of unexpected effects. Governments in these countries should improve the business environment by establishing a framework that further encourages domestic and foreign investment.Originality/valueIn this article, the authors adopt the panel data to study the links between financial flows and economic growth. The authors considered four groups of countries by income.

scholarly journals Exploring Foreign Direct Investment–Economic Growth Nexus—Empirical Evidence from Central and Eastern European Countries

2019 ◽  
Vol 11 (19) ◽  
pp. 5421 ◽  
Author(s):  
Ștefan Cristian Gherghina ◽  
Liliana Nicoleta Simionescu ◽  
Oana Simona Hudea
Keyword(s):  
Economic Growth ◽  
Sustainable Development ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Institutional Quality ◽  
European Countries ◽  
Transport Infrastructure ◽  
Eastern European ◽  
Long Run ◽  
Eastern European Countries

This study aims to examine the link between foreign direct investment (FDI) inflows and economic growth, also considering several institutional quality variables, as well as sustainable development goals (SDGs) set in the 2030 Agenda for Sustainable Development. By estimating panel data regression models for a sample of 11 Central and Eastern European countries, from 2003 to 2016, the empirical outcomes provide support for a non-linear relationship between FDI and gross domestic product per capita. Regarding institutional quality, it is found that control of corruption, government effectiveness, regulatory quality, rule of law, and voice and accountability positively influence growth, while political stability and absence of violence/terrorism is not statistically significant. Moreover, SDGs such as poverty, income distribution, education, innovation, transport infrastructure, and information technology are noteworthy drivers of growth. The outcomes of panel fully modified and dynamic ordinary least squares partly confirm the findings. The panel vector error-correction model Granger causalities provide support for a short-run one-way causal association running from FDI to growth and a long-run two-way causal connection among FDI and growth. Furthermore, in the long run, unidirectional causal relationships running from each institutional quality indicator to economic growth and FDI are set out.

scholarly journals Causal Relationship between Foreign Direct Investment and Economic Growth in Nigeria: 1970-2013

2015 ◽  
Vol 7 (11) ◽  
pp. 230 ◽  
Author(s):  
Uwazie I. U. ◽  
Igwemma A. A. ◽  
Nnabu Bernard Eze
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Unit Root ◽  
Direct Investment ◽  
Developing Economies ◽  
Unit Root Test ◽  
Annual Data ◽  
Policy Reforms ◽  
Causality Test ◽  
Long Run

Foreign direct investment is presumed to play immense role in economic growth in both developed and developing economies. This assumption has motivated the army of studies to actually determine the nexus between foreign direct investment and economic growth in Nigeria. But these studies were not unified on the direction of the causation, hence the need for the study. To effectively analyze the result, the study employs vector error correction model method of causality to analyze the annual data for the periods of 1970 to 2013. The Augmented Dickey-Fuller (ADF) unit root test show presence of unit root at level but stationary after first difference. The Johansen cointegration test confirms that the variables are cointegrated while the granger causality test affirms that foreign direct investment and economic growth reinforce each other in the short run in Nigeria. Also, it is reported that foreign direct investment granger cause economic growth both in the short and long run in Nigeria. Based on these findings, the study advocates the adoption of aggressive policy reforms to boost investors’ confidence and promotion of qualitative human capital development to lure FDI into the country. It also suggests the introduction of selective openness to allow only the inflow of FDI that have the capacity to spillover to the economy. These will attract FDI and boost economic growth in Nigeria.

scholarly journals DETERMINASI PERTUMBUHAN EKONOMI DI TUJUH NEGARA ASEAN PERIODE TAHUN 1996-2013

Media Ekonomi ◽  
2015 ◽  
Vol 23 (2) ◽  
pp. 107
Author(s):  
Desyana Eka Pramasty ◽  
Lydia Rosintan
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Data Analysis ◽  
Panel Data ◽  
Direct Investment ◽  
Panel Data Analysis ◽  
Foreign Debt ◽  
National Income ◽  
Negative Effect ◽  
Asean Countries

<p><em>Economic growth is also one of the most important indicators</em><em> </em><em>in determining the standard of living of people in a country, because of an increase in the production capacity of an economy that is manifested in the form of national income. Economic growth is an indication of the success of economic development, measured by comparing, for example, for domestic size, Gross Domestic Product (GDP) in the current year with the previous year. This study aimed to analyze the factors that affect economic growth in seven ASEAN countries period from 1996-2013. This study use panel data analysis. The factors that affect economic growth in seven ASEAN countries, namely foreign debt, foreign direct investment, and the rate of inflation. Based on panel data analysis of the results showed that the foreign debt has negative effect and significant on economic growth, foreign direct investment has positive effect and significant on economic growth and inflation rate has negative effect and significant on economic growth in seven ASEAN countries period from 1996-2013.</em></p>

scholarly journals Pengaruh Foreign Direct Investment (FDI) Terhadap Pertumbuhan Ekonomi di Nusa Tenggara Barat Tahun 2010-2014

2017 ◽  
Vol 2 (2) ◽  
pp. 18-24
Author(s):  
Munyta Mentari ◽  
Abdul Ilman ◽  
Didi Suwardi
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Panel Data ◽  
Direct Investment ◽  
Capital Investment ◽  
Fixed Effect Model ◽  
Domestic Investment ◽  
Level Of Education ◽  
Domestic Capital ◽  
Level 3

This research aims to analyse the effect of Foreign Direct Investment (FDI) on the economic growth of West Nusa Tenggara (NTB) province within 2010-2014. The dependent variable is economic growth, meanwhile the independent variables are :  1)  FDI proxied from the percentage of foreign capital investment  towards  PDRB; 2) Schooling or level of education proxied from the percentage of  up to 15 years –old people who complete senior high school education level; 3) Domestic investment proxied from the percentage of  domestic capital investment towards PDRB; 4) The interaction of FDI and human capital (level of education) and the control variables which consist of APBD proxied from the percentage of APBD towards PDRB and inflation variable proxied from PDRB deflator. Data analysis used in this study is regression model of panel data. The data is obtained  from 10 districts and cities in  NTB province from 2010 to 2014. The chow test and hausman test resulted to use fixed effect model in that panel data regression procedure. The results show that FDI has a positive yet unsignificant effect on the economic growth with the confidence level of 95%. It is caused by the low level of technological transfer by the province human resources due to the domination of less educated workers.

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