Does Foreign Capital Enhance Economic Growth In Emerging Countries: Flow Decomposition Approach?

2014 ◽  
Vol 31 (1) ◽  
pp. 221
Author(s):  
Imene Debbiche ◽  
Oubeid Rahmouni
Keyword(s):  
Economic Growth ◽  
Empirical Studies ◽  
Dynamic Panel Data ◽  
Capital Inflows ◽  
Financial Openness ◽  
Capital Account Liberalization ◽  
Decomposition Approach ◽  
Total Capital ◽  
The Impact ◽  
Flow Decomposition

Unlike trade liberalization, the impact of financial openness on growth is still mitigated. In fact, empirical studies focusing on effects of capital account liberalization are inconclusive, which could be due to the sample chosen, to the liberalization index or to the fact that studies take account of capital inflows as a whole which can mask substantial differences between different flow effects.Our purpose in this paper is on one hand to re-examine the impact of capital inflows on growth by dividing these inflows into portfolio equity flows, foreign direct investment flows and debt flows and on the other hand to study if the composition of capital inflows has an importance. This work will be done by estimating a standard growth model using dynamic panel data approach.Our main findings are first, that total capital inflows improve economic growth and so does every kind of flow taken apart; which supports the neoclassical wisdom and second, that capital inflows composition isn't important; which indicates that all inflows are substitutes in the short term.

CAPITAL ACCOUNT, INSTITUTIONAL QUALITY, AND ECONOMIC GROWTH IN MENA COUNTRIES: A GMM APPROACH

2016 ◽  
Vol 11 (04) ◽  
pp. 1650016
Author(s):  
MOHAMED ILYES GRITLI ◽  
FATMA MARRAKCHI CHARFI
Keyword(s):  
Economic Growth ◽  
Negative Impact ◽  
Positive Impact ◽  
Empirical Studies ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Capital Account ◽  
Financial Openness ◽  
Capital Account Liberalization ◽  
Mena Countries

Despite the diversity of theoretical and empirical studies, the question of capital account–economic growth relationship remains a controversial issue. The aim of the paper is to complete the existing evidence focusing on Middle East and North Africa (MENA) countries, while taking into account the institutional quality. In this context, various estimates were made by generalized method of moments (GMM) over the period of 1986–2012 for 11 countries. The results show that corruption and democratic accountability have a significant and negative impact on economic growth if capital account liberalization is enacted. However, the interaction term of bureaucracy quality and financial openness has a significant and positive impact on economic growth. These findings therefore show that the benefits of capital account liberalization are not unconditional, but are likely to depend upon the environment in which the liberalization occurs. Our paper contributes to the recent policy debates on the merits and demerits of capital account liberalization.

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 PENGARUH PEMBANGUNAN INFRASTRUKTUR TELEKOMUNIKASI TERHADAP PERTUMBUHAN EKONOMI DI ASEAN

2019 ◽  
Vol 4 (1) ◽  
Author(s):  
Galih adi Prasetyo
Keyword(s):  
Economic Growth ◽  
Trade Openness ◽  
Dynamic Panel Data ◽  
Infrastructure Development ◽  
Method Of Moment ◽  
Telecommunications Infrastructure ◽  
Telecommunication Infrastructure ◽  
Asean Countries ◽  
Urbanization Rate ◽  
The Impact

Abstract This study aims to determine the effect of the development of telecommunications infrastructure to economic growth in ASEAN. Generalized Method of Moment (GMM) is used to test how telecommunication infrastructure development to economic growth in ASEAN. This study uses a dynamic panel data from 10 ASEAN countries in the period 2000-2013. Variables used in this research is the GDP growth, the development of telecommunication infrastructure index, foreign direct investment, trade openness, and urbanization rate. Tests were performed using STATA 13.0 software shows the use sys-GMM better than diff-GMM. The results of this study indicate the development of telecommunications infrastructure significantly affect economic growth but had negative relationships. Based on the theory of demand following hypothesis (DFH) economic growth leads to the development of telecommunications infrastructure. The impact of telecommunications infrastructure development is only emerge through the product or outcome of economic growth. Telecommunications infrastructure development is considered as the impact of economic growth continues to increase.

The impact of foreign capital inflows on economic growth and employment in Egypt

2019 ◽  
Vol 36 (3) ◽  
pp. 258-276
Author(s):  
Hanan AbdelKhalik Abouelfarag ◽  
Mohamed Sayed Abed
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Investment ◽  
External Debt ◽  
Capital Inflows ◽  
Aggregate Model ◽  
Employment Level ◽  
Content Type ◽  
Foreign Capital Inflows ◽  
The Impact

Purpose The purpose of this paper is to trace the effects of both foreign direct investment (FDI) and external debt on economic growth and employment in Egypt over the 1985–2014 period. Design/methodology/approach The empirical analysis includes three stages: an aggregate time series analysis, a panel model that includes six economic sectors and a set of single-sector models. The “autoregressive distributed lag” approach is utilized either in the time series or in the panel models. Findings The empirical results of this research reveal that foreign investment exerts a weak positive effect on economic growth and employment in Egypt. External debt exerts an insignificant effect on economic growth and employment in the aggregate model. The sectoral analysis reveals that the effect varies greatly between sectors; the effect of FDI on output is positive in the financial, tourism and other service sectors, while it is insignificant in the agricultural, construction and manufacturing sectors. Practical implications It is important not to depend on external debt as an easy way to obtain capital. Greater efforts should be exerted to increase the absorptive capacity of the Egyptian economy so as to benefit from the positive spillover effect of foreign investment as much as possible. Originality/value With respect to Egypt, very limited studies have focussed on the role of external debt on growth and that of FDI and external debt on the employment level. There is no general agreement concerning the effect of FDI on economic growth. Therefore, this research explores the effect of FDI and external debt on the Egyptian economy utilizing both aggregate and sectoral data.

Effects of zakat on the economic growth in selected Islamic countries: empirical evidence

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Khoutem Ben Jedidia ◽  
khouloud Guerbouj
Keyword(s):  
Economic Growth ◽  
Growth Factor ◽  
Panel Data ◽  
Aggregate Demand ◽  
Empirical Support ◽  
Dynamic Panel Data ◽  
Content Type ◽  
Muslim Countries ◽  
The Government ◽  
The Impact

Purpose This study aims to examine the impact of zakat on the economic growth for a sample of Muslim countries. As a matter of fact, Zakat is a religious tax on wealth paid annually to specified recipients. As it leads to income redistribution and increases the aggregate demand, zakat can be a growth factor in the Islamic framework. Design/methodology/approach This paper is based on a dynamic panel data model for the purpose of investigating the role of zakat in the economic growth for a sample of eight Muslim countries during the period ranging from 2004 to 2017. The general method of moments is applied. Findings The findings provide evidence that zakat stimulates the country’s growth. Indeed, as zakat funds are directed to increase consumption, investment or government expenditure, they spur on the economic growth. Moreover, the authors come to the conclusion that more trade openness allows an increase in the real gross domestic product (GDP) per capita. However, the broad money to GDP and population growth rate seem insignificantly associated with the economic growth for the sample considered. Practical implications The findings have substantial implications for the economic policy in Muslim countries. Authorities may further rely on zakat to boost the economic growth. First, it is essential to improve the muzakki’s knowledge on zakat to increase their intention, and so their ability and willingness to pay zakat. Second, the government intervention in both zakat collect and distribution becomes mandatory. Therefore, the contribution of zakat to the economic growth will be higher. This requires better-quality services of zakat institutions. Originality/value A few studies have empirically looked into the impact of zakat on the economic growth, especially for panel data. Hence, the present study tries to enrich the literature on this topic. It creates significant evidence regarding the relevance of zakat in Muslim countries. The findings provide empirical support that zakat is an additional growth factor in the Islamic framework.

scholarly journals Financial Inclusion and Demand for Money: a Dynamic Panel Data Approach

2018 ◽  
Vol 7 (2) ◽  
pp. 137-148
Author(s):  
Zelin Nurfadia Sidik ◽  
Noer Azam Achsani ◽  
Syamsul Hidayat Pasaribu
Keyword(s):  
Economic Growth ◽  
Financial Institution ◽  
Developed Countries ◽  
Dynamic Panel Data ◽  
Financial Inclusion ◽  
The Other ◽  
Demand For Money ◽  
Dynamic Panel ◽  
On Demand ◽  
The Impact

Financial inclusion is designed to increase the opportunities and society participation in the formal financial institution, especially for unbanked people. Moreover, financial inclusion is one of strategy inclusive economic growth. However, financial inclusion may lead an ineffectiveness of monetary policy. It is because financial inclusion can affect the sensitivity of interest rate, and it could cause instability demand for money. Therefore, the research aims to analyze the impact of financial inclusion on demand for money, reserve money (M0), in 36 countries for the period 2004 to 2014. The method that used is Dynamic Panel Approach. The result shows that financial inclusion stimulates the increase of demand for reserve money (M0) in developed countries. In the other hand, the increasing of financial inclusion could decrease the demand for reserve money (M0) in developing countries.DOI: 10.15408/sjie.v7i2.6838

scholarly journals The Impact of International Capital Flows on Jordan’s Economic Growth

2019 ◽  
pp. 214-220
Author(s):  
Basem M. Lozi ◽  
Mamoun Shakatreh
Keyword(s):  
Economic Growth ◽  
Capital Flows ◽  
Time Series Data ◽  
Developed Countries ◽  
International Capital Flows ◽  
Capital Inflows ◽  
Series Data ◽  
International Capital ◽  
The Government ◽  
The Impact

The aim of this study is to examine the impact of international capital flows on the economic growth in Jordan during the period from 2005 to 2017, The study also examines trends and composition of capital inflows. The study used descriptive analytical research method which was appropriate for the purpose of research. By using time series data, the study found that Foreign Direct Investment (FDI), foreign portfolio investment (FPI), grants (Gr) and Worker remittances (WR) are positively affecting the economic growth direct contribution. Based on the research results, the study came with a several recommendations, the most important recommendation is; the government of Jordan should create and relax the rules and regulations to attract more investors, and also the government should work hand in hand with the developed countries to create economic and employment opportunities, improve the country’s competitiveness, and expand growth within the private sector so that everyone in Jordan has the opportunity to contribute to a brighter future.

scholarly journals Financial Liberalization, Economic Growth and Investment Strategy: Lessons from Taiwan for New Industrial Countries

2015 ◽  
Vol 3 (2) ◽  
pp. 188 ◽  
Author(s):  
Yu-Wei Lan ◽  
Dan Lin ◽  
Lu Lin
Keyword(s):  
Economic Growth ◽  
Institutional Investors ◽  
Foreign Capital ◽  
Investment Strategy ◽  
Capital Inflows ◽  
Investment Efficiency ◽  
The Real ◽  
Foreign Capital Inflows ◽  
Foreign Institutional Investors ◽  
The Impact

<p><em>To examine the impact of foreign capital inflows on Taiwan’s economy after internet bubbles of 2000, this study adopts data from the first quarter of 2001 to the second quarter 2015 to test if foreign capital inflows have positive impacts on Taiwan’s economic growth. This study also uses program trading and aims to prove that with financial liberalizations, the investment efficiency of foreign institutional investors is better than domestic institutional investors.</em></p><p><em>The results from the error correction model shows that capital formation, domestic savings and foreign direct investment all have positive relationships with the real economic growth. However, the rate of financing and foreign debt and depreciation all have negative relationships with the real economic growth. The results are all statistically significant. Hence, they do not completely support the hypothesis that foreign capital inflows are beneficial for economic growth.</em></p><p><em>Moreover, this study proves that the futures market in Taiwan is not strong-form market efficient. This result provides support for the hypothesis that the investment efficiency of foreign institutional investors is higher than that of domestic institutional investors. Investors can therefore raise their investment performance by following the investment strategies of foreign institutional investors.</em></p>

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