scholarly journals Foreign Capital Inflows and Domestic Savings in Pakistan: Cointegration Techniques and Error Correction Modelling

2002 ◽  
Vol 41 (4II) ◽  
pp. 825-836 ◽  
Author(s):  
Mohsin Hasnain Ahmad ◽  
Qazi Masood Ahmed
Keyword(s):  
Economic Growth ◽  
Foreign Capital ◽  
Developed Countries ◽  
Capital Inflow ◽  
Domestic Saving ◽  
Saving Rate ◽  
Domestic Investment ◽  
Domestic Savings ◽  
Foreign Capital Inflows ◽  
The Impact

The various form of inflow of foreign capital (loans, FDI, grant and portfolio) was welcome in developing countries to bridge the gap between domestic saving and domestic investment and therefore, to accelerate growth [Chenery and Strout (1966)]. Some other have been challenged the traditional view that foreign aid impedes domestic savings growth and mobilisation and have economic growth.1 Much attention have been paid in past 30 years, relationship between foreign capital flows and domestic saving, the main purpose of these studies have been determined whether in less developed countries foreign capital inflow and domestic saving are complementary or substitute. However, there is a controversy at theoretical and empirical levels, over the effects of foreign capital on both economic growth and national saving. A number of studies in Pakistan have been conducted during the early 1990s to examine the relationship between saving and foreign capital inflow.2 All studies shows the inverse relationship between foreign capital inflows3 (aggregate level) and saving rate, but the impact of FCI at disaggregate levels (loans, grants, FDI) on saving rate show different magnitude and signs, similarly impact of FCI on decomposition of saving rate (Public, private, household, corporate) also have different magnitude and sign.

The impact of foreign capital inflows on economic growth on selected African countries

2018 ◽  
Vol 9 (4) ◽  
pp. 523-536 ◽  
Author(s):  
Mohammad Mowlaei
Keyword(s):  
Economic Growth ◽  
Foreign Capital ◽  
Economic Planning ◽  
Data Sets ◽  
Domestic Investment ◽  
African Countries ◽  
Content Type ◽  
Short Run ◽  
Foreign Capital Inflows ◽  
The Impact

Purpose Nowadays, foreign capital inflow (FCI) is considered as a catalyst for economic development and an important source of transferring technology and foreign exchange earnings from developed to developing countries. The purpose of this paper is to study, first, the impact of different forms of FCIs, namely, foreign direct investment (FDI), personal remittances (PR) and official development assistant (ODA) on economic growth on 26 top African countries; and, second, which of them is more effective on economic growth of the studied countries. The results of this paper are very important for host governments’ policy and help them to design their economic plans to absorb the suitable foreign inflow. Design/methodology/approach The paper uses Pooled Mean Group (PMG) econometric technique to estimate the heterogeneous panels over the period 1992–2016. Findings The results of the study show that all three forms of FCIs have positive and significant effects on economic growth in the long and short run. However, the PR had the most effect on economic growth in the long and short run. The study suggests that the governments should design and implement appropriate fiscal, monetary and trade policies in order to create and improve an enabling environment to attract FCIs as a supplementary source of domestic investment. Research limitations/implications The research limitations of this paper are as follows: data sets of FDI, PR and ODA were available not for all African countries; and, data sets that were available were of before the year 1992. Thus, the research is done for the African countries which had the data sets after the year 1992. Practical implications The result of this paper indicates the impact of each FDI, PR and ODA in economic growth. So, countries can take more attentions to each of them on economic planning. Social implications FCIs are one of the important external source of exchange for each country. So, the study of importance of each of them is necessary for economic planning. Originality/value Most of the previous studies have examined the impact of three different forms of FCIs on economic growth separately, on different countries and regions and using various models and econometric techniques. One of the contributions of this paper is focused on the impacts of FDI, PR and ODA on economic growth separately and simultaneously in 26 top recipient African countries and using the PMG technique which is an advanced econometrical estimation and studied less about it. The other contribution of this research is the comparison of the impact of different FCIs on economic growth, and it is very important for governments’ economic policy.

scholarly journals Export Earnings, Capital Instability and Economic Growth in South Asia

2003 ◽  
Vol 8 (1) ◽  
pp. 65-89
Author(s):  
Muhammad Aslam Chaudhary ◽  
Amjad Naveed
Keyword(s):  
Economic Growth ◽  
South Asian ◽  
Foreign Capital ◽  
Developed Countries ◽  
Export Diversification ◽  
Asian Countries ◽  
The Impact ◽  
The Relationship

During the last two decades the role of international trade and flow of foreign capital have received considerable attention in the literature. Various studies have examined the impact of export instability and capital instability on economic growth in less developed countries.1 Empirical evidence supports the hypothesis of a deleterious impact of export instability on economic growth. However, some studies also indicated that the relationship was unstable but positive with economic growth.2 Yet there are no systematic empirical investigations into the implied links between export diversification and long-term economic growth, particularly in the case of South Asian countries. The major concern regarding export instability is that it retards economic growth.

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>

scholarly journals An econometric analysis of the impact of democratisation on domestic savings and investment in Nigeria

2014 ◽  
Vol 9 (4) ◽  
pp. 478-497
Author(s):  
G Dinneya
Keyword(s):  
Economic Growth ◽  
Econometric Analysis ◽  
Domestic Investment ◽  
Empirical Relationships ◽  
Economic Variables ◽  
Long Run ◽  
Composite Indices ◽  
Domestic Savings ◽  
Short Run ◽  
The Impact

This study employs four-dimensional and one composite indices of democratization constructed to capture the democratization processes in Nigeria’s transition polity, to investigate the empirical relationships between the levels of democratization in Nigeria and two economic growth variables – domestic savings and domestic investment. As would be expected, the findings do not settle the debate in any direction. However, they could shed some light on the differences between the dimensional and the overall effects of democratization on economic variables.  The results of the analyses show that the short-run responses of growth variables to changes in democratization may differ from their long-run responses.

Role of External and Domestic Demand in Economic Growth: A Study of BRICS Countries

2019 ◽  
Vol 21 (2) ◽  
pp. 547-566 ◽  
Author(s):  
Bibhuti Ranjan Mishra
Keyword(s):  
Economic Growth ◽  
Developed Countries ◽  
Domestic Demand ◽  
Impulse Response Functions ◽  
Domestic Investment ◽  
Causality Analysis ◽  
Brics Countries ◽  
External Demand ◽  
The Impact

Despite the global downturn since 2008, the growth in BRICS countries as a group is least hampered as compared to the growth in the world, in general, and developed countries, in particular. Is it due to the strong domestic demand factors or external factors is an empirical question to be answered. Further, some economists are promulgating for a new development strategy of domestic demand-led growth. Hence, this article tries to examine the role of domestic and external demand to growth in BRICS countries. Domestic investment is taken to explore the impact of domestic demand on growth, while export and import variables are used to investigate the role of external demand in economic growth. To cater to the objective, causality analysis is done among exports, imports, domestic investment and economic growth using the vector auto regression analysis. Generalized impulse response functions are plotted to get an insight of dynamic interrelationships among these variables. The results are country-specific and mixed evidence of export-led and domestic demand-led growth is found depending on the individual countries of BRICS.

The Impact of Foreign Capital Inflow on Savings and Investment: The Case of Pakistan

1987 ◽  
Vol 26 (4) ◽  
pp. 787-789 ◽  
Author(s):  
Naheed Aslam
Keyword(s):  
Interest Rates ◽  
Foreign Capital ◽  
Capital Inflow ◽  
Capital Inflows ◽  
Foreign Assistance ◽  
Domestic Capital ◽  
Foreign Loans ◽  
Foreign Capital Inflows ◽  
The Impact ◽  
Over Time

The paper examines the role of foreign capital in the context of savings and investment for Pakistan for the period of 1963-64 - 1984-85. The question of the impact of foreign capital inflows on domestic resources has assumed primary importance in view of the increasing debt burden and declining concessionality of foreign loans. The data analysis! , based on the classification of loans according to rates of interest and terms to maturity, reveals that the terms and conditions of foreign loans have become more stringent over time, i.e. higher interest rates and lower maturity periods. The worsening terms and conditions of external loans have resulted in increasing reverse flow obligations. Debt servicing as a ratio of export earnings and foreign capital inflow has rapidly increased over time. During 1960-61 - 1970-71, debt-servicing obligations could be met from 14.85 percent of foreign assistance or 10.29 percent of our commodity export earnings, whereas during 1980-81 - 1984-85 foreign debt servicing could be financed from 29.63 percent of export earnings or 64.79 percent of foreign assistance. The heavy debt-servicing burden and unfavorable outlook for external finance has made it absolutely essential that foreign capital funds should generate internally the capacity to repay these loans. This could be facilitated if foreign capital inflows augment domestic capital formation efforts.

The relationships between foreign direct investment, domestic savings, domestic investment, and economic growth: The case of Sub-Saharan Africa

2016 ◽  
Vol 38 (2) ◽  
pp. 193-217
Author(s):  
Nurudeen Abu ◽  
Mohd Zaini Abd Karim
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Direct Investment ◽  
Sub Saharan Africa ◽  
Domestic Investment ◽  
Long Run ◽  
Domestic Savings ◽  
Sub Saharan ◽  
The Impact

Despite the large body of research on foreign direct investment, domestic savings, domestic investment and economic growth, little has been done to investigate the relationships among them. This paper examines the relationships among foreign direct investment, domestic savings, domestic investment, and economic growth in 16 Sub-Saharan African (SSA) countries from 1981 to 2011, using various techniques. The results of VAR estimation and Granger causality tests demonstrate that there is a unidirectional causality from foreign investment to growth and domestic investment, savings to growth, and a bidirectional causality between growth and domestic investment as well as savings and domestic investment. The results of the variance decomposition analysis reveal that foreign investment exerts more influence on growth. Savings are more important in explaining domestic investment, growth is more important in explaining foreign investment, and domestic investment is more important in explaining savings. Based on the results of the impulse response analysis, there is a positive unidirectional causality from foreign investment to growth and domestic investment, savings to growth, and a positive bidirectional causality between savings and domestic investment, both in the short and long-run. Although there is feedback causality between domestic investment and growth, the impact from investment is negative in the short-run and positive in the long-run. Thus, policies that encourage foreign investment and savings are required to boost domestic investment and promote growth, and policies that raise domestic investment will lead to higher savings and growth in SSA.

scholarly journals Exporting the Greenhouse: Foreign Capital Penetration and CO? Emissions 1980–1996

2003 ◽  
pp. 261-275 ◽  
Author(s):  
Peter Grimes ◽  
Jeffrey Kentor
Keyword(s):  
Foreign Investment ◽  
Carbon Dioxide Emissions ◽  
Foreign Capital ◽  
Developed Countries ◽  
Systematic Effect ◽  
Domestic Investment ◽  
Environmental Controls ◽  
The Impact ◽  
Positive Effect ◽  
Cross National

This research examines the impact of foreign investment dependence on carbon dioxide emissions between 1980 and 1996. In a cross-national panel regression analysis of 66 less developed countries, we find that foreign capital penetration in 1980 has a significant positive effect on the growth of C0 2 emissions between 1980 and 1996. Domestic investment, however, has no systematic effect. We suggest several reasons for these findings. Foreign investment is more concentrated in those industries that require more energy. Second, transnational corporations may relocate highly polluting industries to countries with fewer environmental controls. Third, the movement of inputs and outputs resulting from the global dispersion of production over the past 30 years is likely to be more energy-expensive in countries with poorer infrastructure. Finally, power generation in the countries receiving foreign investment is considerably less efficient than within the countries of the core.

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