The impact of foreign direct investment on income inequality: a panel Autogressive Distributed Lag approach for the Asia-Pacific Economic Cooperation developing economies

Since one of the main goals of the APEC is to facilitate the international trade and investments among its members, it is said that taking over APEC presidency (as Peru in 2008), will contribute to foster trade and attract investments from member economies. But, is there any pattern which allows quantifying the benefi ts resulting from this kind of commitment? After evaluating the trade statistics of APEC developing economies ever since the creation of the Forum in 1989, it can be inferred that presiding APEC does not guarantee an increase in its trade with the rest of APEC economies. Right after hosting the summit, its imports grow higher compared with its exports, but there is not any conclusive information on the growth of foreign direct investment (FDI). Nevertheless, even though the growth of trade and FDI attraction from APEC other member economies does not rely exclusively on taking over the Forum’s Presidency, this commitment is a unique opportunity to promote trade with the planet’s most important economic bloc.

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Effects of foreign direct investment on economic growth in Ghana: the role of institutions

Economics of Development ◽

10.21511/ed.20(1).2021.03 ◽

2021 ◽

Vol 20 (1) ◽

pp. 23-34

Author(s):

Evans Kulu ◽

Samuel Mensah ◽

Prince Mike Sena

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Secondary Data ◽

Output Growth ◽

Data Series ◽

Development Indicators ◽

Distributed Lag ◽

The Impact

The role of institutions in both the inflow and the impact of foreign direct investment is of great im¬portance. The quality of institutions in a country can direct investment towards improving growth. This paper analyzes the individual and combined effect of foreign direct investment and institutions on economic growth in Ghana. The paper used the Auto Regressive Distributed Lag (ARDL) tech¬nique for secondary data obtained from 1995 to 2019. All data series, except for the quality institution index, were drawn from the World Bank Development Indicators. Institutional Quality Index data was obtained from the Heritage Foundation’s Economic Freedom Index website. The results of the ARDL model indicate that foreign direct investment and a quality institutional index together have a significantly positive effect on a country’s economic growth compared to their individual effects in both the short and long run. The study recommends that government policies should be aimed at attracting foreign direct investment while strengthening institutions and regulations to enhance output growth.

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Impact of Foreign Direct Investment on Domestic Investment in Developing Countries

Bulletin of Science and Practice ◽

10.33619/2414-2948/58/27 ◽

2020 ◽

Vol 6 (9) ◽

pp. 256-266

Author(s):

A. Mamatkulov

Keyword(s):

Developing Countries ◽

Foreign Direct Investment ◽

Direct Investment ◽

Developing Economies ◽

Negative Impact ◽

Domestic Investment ◽

Short Term ◽

Total Investment ◽

The Impact

Author analyzes the impact of foreign direct investment on domestic investment in host developing countries and checks whether a foreign direct investment has a “positive” or “negative” impact on domestic investment, as well as evaluating the impact of selected variables on this relationship. Using a full sample, the main conclusion of this study is that FDI does have a positive (crowding out) effect on domestic investment in this sample of developing economies. In the short term, an increase in FDI by one percentage point as a percentage of GDP leads to an increase in total investment as a percentage of the host country’s GDP of about 10.7%, while in the long term this effect is about 31% dollar terms, one US dollar represents us 1.7$ of total investment in the short term and us 3.1$ in the long term. Based on the results of this study, it was once again proved that inflation hinders domestic investment in host countries by 0.04% and 0.12% in the short and long term, respectively.

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The Use of Auto-Regressive Distributed Lag Method in Investigating The Impact of Interest Rate on Foreign Direct Investment in Yemen for the Period 1990-2018

Journal of Economics and Administrative Sciences ◽

10.33095/jeas.v26i123.1992 ◽

2020 ◽

Vol 26 (123) ◽

pp. 145-157

Author(s):

Saif Sallam Alhakimi

Keyword(s):

Foreign Direct Investment ◽

Interest Rate ◽

Interest Rates ◽

Direct Investment ◽

Inflation Rate ◽

Trade Openness ◽

Fdi Inflows ◽

Distributed Lag ◽

Auto Regressive ◽

The Impact

Foreign direct investment has seen increasing interest worldwide, especially in developing economies. However, statistics have shown that Yemen received fluctuating FDI inflows during the period under study. Against this background, this research seeks to determine the relationship and impact of interest rates on FDI flows. The study also found other determinants that greatly affected FDI inflows in Yemen for the period 1990-2018. Study data collected from the World Bank and International Monetary Fund databases. It also ensured that the time series were made balanced and interconnected, and then the Auto Regressive Distributed Lag method used in the analysis. The results showed that the interest rates and inflation rate harmed FDI flows and, therefore, could not be used for policymaking purposes. The research also discovered that GDP growth and trade openness are the main determinants of foreign direct investment in Yemen. Trade openness policies should be encouraged, and GDP growth facilitated if the economy is to achieve long-term FDI flows. Purpose –The purpose of the paper is to discover the impact of interest rate on foreign direct investment with a combination of the exchange rate, inflation, gross domestic product, and trade openness. Design/methodology/approach – The paper implements the Auto Regressive Distributed Lag (ARDL)-Bounds testing approach to analyze maintaining the time series properties in terms of stationarity. Findings – The results indicate that there is a long-run equilibrium between the Foreign Direct Investment and the explanatory variables. Furthermore, the significant factors influencing, positively, FDI in Yemen are Growth domestic product, Exchange rate, and Trade openness. In contrast, both the Interest rate and Inflation rate have a substantial negative impact on Foreign Direct Investment. Practical implications – Policymakers in Yemen advised reconsidering many of the general state policies, including investment policies, financial and administrative governance, and monetary policy that focuses on maintaining an adequate interest rate and reduce the rate of inflation. Originality/value – As for the case of Yemen, this the first study empirically explores the impact of interest rate and the foreign direct investment using the Auto Regressive Distributed Lag method aiming for more reliable results.

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Institutional quality and foreign direct investment in Ghana

Review of International Business and Strategy ◽

10.1108/ribs-08-2019-0107 ◽

2020 ◽

Vol 30 (1) ◽

pp. 109-122 ◽

Cited By ~ 2

Author(s):

Ibrahim Nandom Yakubu

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Institutional Quality ◽

Principal Component ◽

Political Stability ◽

Single Measure ◽

Content Type ◽

Distributed Lag ◽

Long Run ◽

The Impact

Purpose This paper aims to investigate the impact of institutional quality on foreign direct investment (FDI) in Ghana for the period 1985-2016. Design/methodology/approach The study uses the autoregressive distributed lag (ARDL) approach to examine the relationship between institutional quality along with other controlled variables and FDI. Findings Evidence from the ARDL framework establishes a positive significant effect of institutional quality on FDI irrespective of the time horizon. The results also reveal a significant impact of inflation on FDI in both short and long run, while GDP per capita growth and trade are significant determinants only in the short run. Practical implications The study recommends the instigation of effective policies and strategies that seek to strengthen the quality of institutions, as this provides a conducive investment climate to attract FDI. Specifically, policies that are focused on promoting transparent legal regimes, regulatory reforms, non-corrupt institutions and political stability should be the precedence of policymakers. Originality/value In addition to being a pioneering work on the impact of institutional quality on FDI in Ghana, the main contribution of the study lies in its application of the principal component analysis to generate a single measure of institutional quality based on a number of institutional factors.

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ICT Diffusion and Foreign Direct Investment

International Comparisons of Information Communication Technologies ◽

10.4018/978-1-61350-480-2.ch013 ◽

2011 ◽

pp. 294-320

Author(s):

Farid Shirazi ◽

Dolores Añón Higón ◽

Roya Gholami

Keyword(s):

Foreign Direct Investment ◽

Middle East ◽

Direct Investment ◽

Middle Eastern ◽

Asia Pacific ◽

Outward Fdi ◽

Middle East Countries ◽

Inverse Effect ◽

The Impact

This chapter investigates the impact of inward and outward FDI on ICT diffusion in the Asia-Pacific and Middle East regions for the period 1996-2008. The results indicate that while inward FDI has generally had a positive and significant impact on ICT diffusion in Asia-Pacific economies, its impact on the Middle Eastern countries has been detrimental. In contrast, the results of this study also show that outward FDI has had, in general, the inverse effect, it has been in general positive and significant for the Middle East countries but insignificant for Asia-Pacific economies.

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The Impact of Foreign Direct Investment on Domestic Savings and Investment in Select Developing Economies

International Studies ◽

10.1177/002088170203900105 ◽

2002 ◽

Vol 39 (1) ◽

pp. 79-87 ◽

Cited By ~ 1

Author(s):

Mahesh Lalwani

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Developing Economies ◽

Domestic Savings ◽

The Impact

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Determinants of Foreign Direct Investment in Developed and Developing Countries: Impact of Political Stability

Economy of region ◽

10.17059/ekon.reg.2021-4-24 ◽

2021 ◽

Vol 17 (4) ◽

pp. 1390-1404

Author(s):

R.I. Vasilyeva ◽

◽

O.S. Mariev ◽

Keyword(s):

Developing Countries ◽

Foreign Direct Investment ◽

Direct Investment ◽

Developing Economies ◽

Political Stability ◽

Policy Implications ◽

Likelihood Method ◽

Developed Economies ◽

Development Level ◽

The Impact

Stable political environment and prominent development of political institutions increase foreign direct investment flows by providing lower risks for investors. However, this impact can vary according to the development of the country. This study aims to investigate the impact of various indicators of political stability on foreign direct investment attraction for different economies distinguished by their development level. Our database includes 66 FDI-recipient countries and 98 FDI-investing countries for the period from 2001 to 2018. By applying the gravity approach and Poisson Pseudo Maximum Likelihood method with instrumental variables (IV PPML), we model bilateral FDI flows, incorporating variables reflecting various aspects of political stability formed by the principal components analysis. Interestingly, we found mixed results regarding the impact of political stability on FDI flows. In particular, political stability indicators were found to be insignificant, when analysing the bilateral FDI flows for the group of developed economies. We obtained similar result for the group of developing economies. However, political stability variables significantly influence FDI flows for countries with different development level, confirming the hypothesis that countries’ development affects bilateral FDI flows. Besides, we discover the significant difference between developed and developing countries referring to FDI-investors. Based on the obtained results, we highlight a few policy implications for developing and developed economies.

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Modeling the Impact of Foreign Investment Flows Taking into Account Time Lags in the Context of their Impact on the Regional Production

International Journal of Recent Technology and Engineering - 2 ◽

10.35940/ijrte.f7931.038620 ◽

2020 ◽

Vol 8 (6) ◽

pp. 1835-1839

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Time Lag ◽

Time Lags ◽

Distributed Lag ◽

Distributed Lag Models ◽

Comparison Time ◽

Western Ukraine ◽

Regional Product ◽

The Impact

Peculiarities of regional processes of foreign direct investment impact on the gross domestic product of Western Ukraine and Chernivtsi region, taking into account a time lag, are reviewed in this article. Considering the fact that investment processes are enough complicated phenomenon to understand in the course of which different kinds of changes occur, the relevance and importance of establishing a pattern of their behavior is increasing. Economical and mathematical tools, in particular Almon distributed lag models which allow to estimate the discrete lag influence of determinants can be used to achieve this. In the course of the study, the Almon distributed lag models were constructed separately for the comparison, time lag interval boundaries were set, the main features of the discrete time lag distribution during the lag period were determined, and the economic and mathematical models of the distributed lag for the effects of foreign direct investment on the gross regional product of Chernivtsi region Western Ukraine were built. On the basis of the obtained results, conclusions about economic multiplier processes of the investment were made in the context of individual territories and the main trends of the investment flow return were defined.

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The Lagged Effects of Corruption Control, Business Environment and Economic Growth on Foreign Direct Investment in the Philippines

Asian Journal of Social Science ◽

10.1163/15685314-04501008 ◽

2017 ◽

Vol 45 (1-2) ◽

pp. 176-204

Author(s):

Prinz P. Magtulis ◽

Sauk-Hee Park

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Business Environment ◽

The Philippines ◽

Asia Pacific ◽

Lagged Effects ◽

Historical Developments ◽

High Level ◽

The Impact

Despite vast natural resources and geographic advantages in the Asia-Pacific region, foreign direct investment (FDI) in the Philippines was ranked among the lowest in the region for the past 30 years. Some challenges, including high-level public corruption, low economic development and the government’s inability to establish a good business environment, are seen to have reduced FDI. Moreover, the Philippines still remains lagging in the South East Asian region in terms of FDI despite recent developments, such as good GDP figures and the reforms put in place by President Benigno Simeon Aquino III. This may imply an interval between the reforms made and their impact on FDI. Thus, this study investigates the lagged effects of the government’s anti-corruption stance, reforms undertaken to facilitate business and economic growth on FDI in the Philippines. In the process, it draws on both qualitative and quantitative data: The latter utilises an auto-regressive distributed lagged model to find possible time intervals on the impact of variables with each other, while the former provides support through a narration of historical developments, trends and explanations rooted on theoretical foundations.

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