Foreign Direct Investment and Local Financial Market Development: A Granger Causality Test Using Panel Data

2010 ◽  
Author(s):  
Ashraf Abdelaal Mahmoud
Keyword(s):  
Foreign Direct Investment ◽  
Panel Data ◽  
Granger Causality ◽  
Financial Market ◽  
Direct Investment ◽  
Granger Causality Test ◽  
Market Development ◽  
Causality Test ◽  
Financial Market Development

scholarly journals The Impact of Foreign Direct Investment on Financial Market Development: The Case of Jordan

2020 ◽  
Vol 11 (4) ◽  
pp. 64
Author(s):  
Buthiena Kharabsheh ◽  
Ahlam Aldaher
Keyword(s):  
Foreign Direct Investment ◽  
Financial Market ◽  
Direct Investment ◽  
Causal Effect ◽  
Granger Causality Test ◽  
Market Development ◽  
Causality Test ◽  
Vector Autoregressive ◽  
Integration Test ◽  
Financial Market Development

This study examines the causal effect between foreign direct investment (FDI) and financial market development (FMD) in Jordan. Annual time-series data is used over the period 1978-2017. Principal component analysis is employed to create two indices to reflect FMD, namely stock market development (SMD) and banking sector development (BSD). To detect the causal effect between FDI and FMD, Vector Autoregressive Regressions, Granger Causality test and Johansen Co-integration test are employed in the analysis. In the short-run, the findings of Vector Autoregressive Regressions document a positive significant effect between SMD and FDI, however, no effect is found between BSD and FDI. The Granger Causality test shows unidirectional causality between SMD to FDI. Moreover, the Johansen Co-integration test reveals a long-run equilibrium relationship between FDI and FMD. These results are expected to have important implications for policy makers in Jordan.

scholarly journals The nexus between foreign direct investment and environmental sustainability in North Africa

2018 ◽  
Vol 9 (1) ◽  
pp. 57-68
Author(s):  
Marwa Lazreg ◽  
Ezzeddine Zouari
Keyword(s):  
Foreign Direct Investment ◽  
Granger Causality ◽  
Co2 Emissions ◽  
Direct Investment ◽  
Granger Causality Test ◽  
North African ◽  
African Countries ◽  
Causality Test ◽  
The North ◽  
North African Countries

This paper provides a study of the relationship between sustainable development and foreign direct investment (FDI) from an empirical point of view in the case of the North African countries during the period from 1985 to 2005. We use the cointegration test, the FMOLS (Fully Modified Ordinary Least Squares) model and the Granger causality test to examine this relationship. According to the empirical results, we confirm the existence of a cointegration relationship between the different series studied in this paper. Based on the cointegration test we can use the error correction model. Also, to test the effect of FDI on sustainable development in the North African countries, we make an estimate by FMOLS method. We found that the foreign direct investment has a positive impact on CO2 emissions. Also, the Granger Causality test confirms the presence of a bidirectional relationship between FDI and CO2 emissions (Carbon dioxide). That is to say, the FDI can cause CO2 emissions and CO2 emissions can cause FDI based on the Granger causality.

scholarly journals Investigating the Relationship between Unemployment and Inflation in Nigeria

2021 ◽  
Vol 04 (03) ◽  
Author(s):  
Charity I. Anoke I. Anoke ◽  
Keyword(s):  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Economic Status ◽  
Government Expenditure ◽  
Negative Relationship ◽  
Granger Causality Test ◽  
Causality Test ◽  
Long Run ◽  
The Impact

This study considered the impact of inflation on unemployment in Nigeria viz avis selected macroeconomic variables. The researcher adopted co integration, vector error correction model and VEC Granger causality test econometric procedure in the analysis of the data employed. The specific objectives of the study are; (i) to determine the extent to which inflation impact on unemployment in Nigeria within the period of study, (ii) to examine if government expenditure have any significant impact on unemployment in Nigeria within the period of study, (iii) to estimate the significant impact of foreign direct investment on unemployment in Nigeria within the period of study; (iv) to investigate the extent of direction of causality between unemployment and inflation in Nigeria within the period of study. The results of the research revealed long run relationship among estimated variables, VECM result showed a positive significant relationship between inflation and unemployment in the short run and long run, government expenditure and foreign direct investment maintained negative relationship with unemployment both in the short and long run. The VEC Granger causality test indicated causality among UNEM, INF and TGEX. The research recommended that (i) government should focus on policy and strategy that can attract foreign direct investment into the country, (ii) government should try to maintain low inflation rate through suitable monetary policy; (iii) government should encourage investment platforms and enabling environment for effective and efficient national output; and (iv) Government should consciously increase fiscal space for capital activities and projects that are capable of generating income, increase domestic and public spending, improve economic status and reduce unemployment. This paper concluded that the Philip’s curve hypothesis does not apply in Nigeria within the period of study as the result failed to establish an inverse relationship as postulated by A.W. Philips.

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 Role of Education and Financial Market Development in Attracting Foreign Direct Investment Inflows in Pakistan

TEM Journal ◽  
2021 ◽  
pp. 1184-1189
Author(s):  
Haider Mahmood ◽  
Muhammad Tanveer
Keyword(s):  
Foreign Direct Investment ◽  
Financial Market ◽  
Direct Investment ◽  
Market Development ◽  
Fdi Inflows ◽  
Long Run ◽  
Short Run ◽  
Financial Market Development ◽  
Positive Effect

This paper has investigated the role of education and Financial Market Development (FMD) on the Foreign Direct Investment (FDI) inflows in Pakistan from 1970-2019. In the short run, education has a positive effect on FDI inflows. 1% increasing of government's spending on education would increase 0.361% of FDI inflows in Pakistan. Moreover, the FMD has a positive effect on FDI inflows in the short run. 1% increasing FMD may increase 0.0496% of FDI in the short run. Both education and FMD are supporting the FDI inflows in the short run. Comparatively, education shows a larger effect on FDI than that of FMD in the short run. However, FMD and government spending on education could not affect the FDI inflows in the long run. This paper recommends supporting education and financial markets to attract FDI inflows in Pakistan.

scholarly journals IMPACT OF STOCK MARKET DEVELOPMENT ON ECONOMIC GROWTH: EMPIRICAL EVIDENCE

Globus ◽  
2020 ◽  
Author(s):  
T.M. Aliyev
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Stock Market ◽  
Direct Investment ◽  
Granger Causality Test ◽  
Market Liquidity ◽  
Market Development ◽  
Causality Test ◽  
Stock Market Development ◽  
Oil Sector

Development of non-oil sector of Azerbaijan was always one of the main priorities of the government. Oil sector of the economy was well developed since Azerbaijan got its independence, but in order to use the oil source more effectively it was determined to diversify the funds into non-oil sector of the economy, which in the end gave huge boost to most industries of the economy and led to increase of foreign direct investment. However, another source of the foreign direct investment and investor attraction – stock markets, were not developed and organized properly up until 1998, which was mainly due to outdated procedures left from USSR, absence of principles, methodology and understanding of how stock market can play huge role in expansion of economy and attraction of foreign investment. Nowadays, Azerbaijan has all possibilities to widen the stock market, enable easy way of increasing number of small businesses, startups and open the doors for them to global economy and lead to speedy expansion of the businesses. This research analyses the possible relationship between stock market development and economic growth, in order to predict possibility of positive impact of stock market on economic growth, overall social economic welfare of the country and business environment. For the purposes of the research, statistical figures of the country`s main economic indexes were collected: gross domestic product value, foreign direct investment value, stock market liquidity and turnover values, which were then analyzed and tested on various levels of cointegration test, Granger Causality test, vector error correction model and etc. All the analysis were done on statistical software Stata 11 based on figures of 1998-2016. The outcome of the Johansen-Julius shows existence of cointegration and by that VECM test proves relationship between stock market and economic growth in long run, while Wald Test confirms correction of this growth in short term by given explanatory variables. Hence, Granger causality test is conducted further, which determines bidirectional relationship between 3 variables: foreign direct investment, GDP and LIQ (stock market liquidity level). Based on the outcome of the analysis, study concludes that expansion of stock market and increase in foreign direct investment will have chain effect which leads to economic growth and social welfare in Azerbaijan.

scholarly journals Foreign Direct Investment (FDI), Trade and Its Contribution to the Proposed Logistics Hub in Jamaica

2015 ◽  
Vol 2 (4) ◽  
pp. 44-48
Author(s):  
Kimberly Racquel Elizabeth Chin
Keyword(s):  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Mining Industry ◽  
Granger Causality Test ◽  
Causality Test ◽  
Independent Variables ◽  
Causality Relationship ◽  
The Government ◽  
The Relationship

In order to objectively analyze contribution of logistic operations to Jamaica’s Foreign Direct Investment (FDI), we perform the Granger causality test. This test was used to determine the relationship among Gross Domestic Product (as a dependent variable) and Government Income, Trade, FDI inflow and the Exchange rate (as independent variables). The Granger causality test produced evidence of a bidirectional causality relationship which suggests that FDI’s influence on efficiency lies in the government relaxing its dependency on the mining industry for economic growth. fdi logistics

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