scholarly journals Financial Development and Economic Growth: Evidence from Nepal

2020 ◽  
Vol 32 (1) ◽  
pp. 15-36
Author(s):  
Ramesh C. Paudel ◽  
Chakra Pani Acharya
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Banking Sector ◽  
Time Series Data ◽  
Series Data ◽  
Distributed Lag ◽  
Domestic Credit ◽  
Good Policy

This paper aims to examine the role of financial development and economic growth in Nepal employing Autoregressive distributed lag (ARDL) approach of cointegration using time series data for the period from 1965 to 2018. Nepal is a unique country with big markets in the neighbors-India and China but remains as one of the poor landlocked developing countries, even being the earlier entrant in liberalization and reform. Nepal recently went through a substantial political transition and now the stable government is seeking substantial amount of foreign direct investment. In this background, it will be better, for a good policy analysis, to know how the financial activities have played the role in highly intended economic growth. We develop a model with five proxies of financial development (broad money, domestic credit to private sector, total credit from banking sector, capital formation, and foreign direct investment); and econometrically test their contribution in economic growth. Overall, the results suggest that financial development causes to economic growth substantially, except in the case of foreign direct investment. This result warns the policy makers to be more serious making investment friendly economy to attract the expected foreign direct investment.

scholarly journals Pakistan's Growth Empirics and Foreign Direct Investment: An Assessment of the Role of Domestic Financial Sector

2021 ◽  
Vol 7 (2) ◽  
pp. 357-367
Author(s):  
Noreen Safdar ◽  
Ruqia Shaheen ◽  
Fouzia Yasmin ◽  
Naureen Afzal
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Time Series Data ◽  
Financial Sector ◽  
Series Data ◽  
Development Index ◽  
Financial Development Index

Purpose: This reseach endeavours to investigate the role of fiancial sector in determining the foreign direct inflows in pakistan. Design/Methodology/Approach: Autoregressive Distributed Lag Model is applied to conclude the nature of linear association among the variables, in this study, we have used time series data over the period 1980-2019 of Pakistan. A financial development index has been created to illustrate the financial development by using Principle Component Analysis (PCA). Robustness of the relation among variables is also checked, and incorporated this in the empirical model. Findings: The findings described very interesting implications, by exhibiting a positive association among FDI and economic growth in the presence of financial sector indicators. These conclusions hold notwithstanding in the presence or absence of Financial development Index. Therefore, the presence of strong financial sector is necessary to attract FDI and to smoothen the economic growth process.Implications/Originality/Value: The role of fiancial sector is indespensible in determining the economic activity. In addition to this, research at hand explore the inclusive nature of the relationships among foreign direct investment (FDI), Financial sector, and economic growth. It exhibits a reflection of the various sources of economic growth.

scholarly journals Financial Development and Economic Growth in Nepal: An ARDL Bound Test Approach

2021 ◽  
Author(s):  
Pradeep Panthi
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Time Series Data ◽  
Series Data ◽  
Reverse Causality ◽  
Distributed Lag ◽  
Dynamic Relationship ◽  
Long Run ◽  
Domestic Credit ◽  
Bound Test

Abstract This study empirically examines the dynamic relationship between financial development and economic growth in Nepal using annual time series data from 1985 to 2016. The financial development is measured by domestic credit to the private sectors, domestic credit to the private sectors by banks, broad money (M2) and net domestic credit, separately. All are ratios to GDP. The economic growth is measured by real GDP per capita. The bound test approach of cointegration under autoregressive distributed lag (ARDL) model reveals that Nepal’s financial development and economic growth are cointegrated with bi-directional causality in the long-run. Thus, the study concludes that financial development and economic growth positively and significantly impact each other. The causal effects running from financial development to economic growth are portent then economic growth to financial development. However, the speed of adjustment towards long-run equilibrium, directing from economic growth to financial development is reasonably robust. There is one-directional reverse causality running from economic growth to financial development in the short-run. Therefore, the study suggests policymakers to prioritize policies to develop a well-functioning financial sector to enhance economic growth, especially for developing countries like Nepal.JEL ClassificationsG21, C22, F43, O11, O16

scholarly journals ANALISIS PENGARUH REMITANSI, INVESTASI ASING LANGSUNG, IMPOR DAN PERTUMBUHAN EKONOMI DI INDONESIA

2020 ◽  
Vol 2 (4) ◽  
Author(s):  
Regina Septriani Putri ◽  
Ariusni Ariusni
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Positive Impact ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
Positive Effect

Abstract : This study examined and analysis the effect of remittances, foreigndirect investment, imports, and economic growth in Indonesia in the long run andshort run. This study using Error Correction Model (ECM) method and using theannual time series data from 1989 to 2018. This study found that: (1) remittancehave an insignificant positive effect on economic growth in the long run and shortrun,(2)foreign direct investment have a significant positive impact on economicgrowth in the long run and short run, (3) import have an insignificant positiveimpact on economic growth both in the long run and short run. To increase theeconomic growth in the future, this study suggests the government to decresingimports of consume goods and increasing the inflow of capital goods, rawmaterial goods, remittances and foreign direct investment.Keyword : Remittance, Foreign Direct Investment, Import, Economic Growth andECM

scholarly journals FDI and long-term economic growth in Egypt

2017 ◽  
Vol 13 (1) ◽  
pp. 65-74
Author(s):  
Saif Alhakimi
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Government Expenditure ◽  
Wage Structure ◽  
Series Data ◽  
The Impact

This research paper aims to empirically analyze the impact of FDI on the long-term economic growth of Egypt. An empirical model was developed to explain the aggregate output, including total labor force, capital stock, foreign direct investment, government expenditure, and the real exchange rate. Annual time-series data from 1990–2013 were then used to estimate the model. Prior to calculating this estimation, the properties of the time series were diagnosed, and an error-correction model was developed and assessed. The overall results suggest that foreign direct investment makes a positive, yet weak and insignificant, contribution to the long-term economic growth of Egypt. This finding warrants further investigation to explore the possible reasons behind it, such as the degree of spillover that FDI has on economic growth and its impact on employment in areas like job creation, wage structure, research, and development.

scholarly journals External Sector Aggregates and Economic Growth in Nigeria

2018 ◽  
pp. 33-42
Author(s):  
Akidi, Victor ◽  
Tubotamuno, Boma ◽  
Obayori, Joseph Bidemi
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Time Series Data ◽  
Unit Root Test ◽  
Series Data ◽  
Correction Technique ◽  
Integration Test ◽  
External Sector

This paper empirically examined the effects of selected external sector aggregates on economic growth in Nigeria from 1981 to 2016. Time series data on Real Gross Domestic Product as proxy for economic growth, and on Imports, Exports, Exchange Rate and Foreign Direct Investment were collected from secondary sources. The data sets were analyzed using descriptive statistics, unit root test, co-integration test and error correction technique of model estimation. The result of the analysis revealed that Imports, Exchange Rate and Foreign Direct Investment negatively related with economic growth while Exports positively related with economic growth in Nigeria within the reviewed period. Also, except Exchange Rate all the other explanatory variables – Imports, Exports and Foreign Direct Investment did not impact significantly on economic growth in Nigeria within the period of study. Based on these findings, the study recommends that government should encourage export diversification, especially the non-oil sector exports. This can be achieved through value addition in both the agriculture and manufacturing sub-sectors output.

scholarly journals The Relationship between Electric Power Consumption, Foreign Direct Investment and Economic Growth in Sri Lanka

2020 ◽  
pp. 21-31
Author(s):  
S. Maheswaranathan
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Sri Lanka ◽  
Direct Investment ◽  
Time Series Data ◽  
Empirical Finding ◽  
Electricity Consumption ◽  
Series Data ◽  
Long Run ◽  
Bound Test

Purpose: This paper investigates the long run relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka. Design/Methodology/Approach: The annual time series data over the period 1970–2017 is considered to this study. Augmented Dickey–Fuller (ADF) unit root analysis is employed for examining the stationary properties of the variables. Consequently, Autoregressive Distributed Lag (ARDL) analysis is employed to examining the short- run and long-run relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka. Further, this study used the diagnostic tests such as the residual normality test, heteroskedasticity and serial autocorrelation tests for misspecification to validate the parameter estimation outcomes achieved by the estimated model. CUSUM test is applied to test the stability of the model. Collected data were analyzed using STATA version 15. Findings: The findings of the bound test confirm that the variables are cointegrated. Further the results reveal that there is a statistically positive significant relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka in the long run and short term. The empirical finding reveals that one percent increase in electricity consumption and foreign direct investment increases the GDP by 1.5 percent and 12.9 percent in the long run respectively.

Foreign Direct Investment, Financial Development, and Economic Growth Nexus in Bangladesh

2020 ◽  
pp. 056943452093867
Author(s):  
Md. Noman Siddikee ◽  
Mohammad Mafizur Rahman
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Banking Sector ◽  
Negative Impact ◽  
Capital Formation ◽  
Long Run ◽  
Short Run ◽  
The Impact

This article aims to explore the short- and long-run impact of foreign direct investment (FDI), financial development (FD), capital formation, and the labor forces on the economic growth of Bangladesh. We applied the Granger causality test and Vector Error Correction Model (VECM) for this study. The World Bank data for the period of 1990–2018 are taken into account for the analysis. Our findings suggest, in the long run, capital formation has a positive impact, and in the short run, it has a negative impact on gross domestic product (GDP) implying a lack of higher efficiency is persisting in capital management. Similarly, labor forces have an insignificant impact in the short run and a negative impact in the long run on GDP, which confirms the presence of a huge number of unskilled laborers in the economy with inefficient allocation. The impact of FD is found tiny positive in the short run but large negative in the long run on GDP indicating vulnerability of banking sector. These also confirm fraudulence and inefficient use of the domestic credit supplied to the private sector. The impact of FDI is approximately null both in the short and long run, indicating Bangladesh fails to achieve the long-term benefits of FDI. Finally, this study suggests using FDI more in the capital intensive project of the public–private partnership venture than infrastructural development only and also improving the credit management policy of the banking sector. JEL Classifications: F21, F43, J21

Trade Openness, Foreign Direct Investment and Economic Growth: Empirical Evidence from India

2016 ◽  
Vol 6 (2) ◽  
Author(s):  
Brajaballav Pal
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Trade Openness ◽  
Unit Root Test ◽  
Series Data ◽  
Long Run ◽  
Integration Test ◽  
The Government

This paper examines the relationship among GDP, foreign direct investment and trade openness for India using time series data from 2001 to 2016. In this study unit root test is used to solve the problem of stationery and to determine the order of integration between the variables. Johnson co-integration test suggests that there is a long run equilibrium relationship among the variables by considering relationship between Gross Domestic Product (GDP), Foreign Direct Investment (FDI) and Trade Openness (TO). The result indicates that trade openness exerts influence on foreign direct investment. The government and policy makers should take up strategies to attract foreign investment so as to promote economic growth.

Impact of Globalization on Economic Growth in Vietnam: An Empirical Analysis

2018 ◽  
pp. 32-47 ◽  
Author(s):  
Dat Tho Tran ◽  
Van Thi Cam Nguyen
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Empirical Analysis ◽  
Direct Investment ◽  
Time Series Data ◽  
Series Data ◽  
Balance Of Trade ◽  
The Impact

This study aims at investigating the impact of globalization on economic growth in the case of Vietnam. Empirical analysis is done by using time series data for the period from 1995 to 2014. The paper tested the stationary cointegration of time series data and utilized the error correction modeling technique to determine the short run relationships among economic growth, globalization, foreign direct investment, balance of trade and exchange rate variables. Then, the long run relationship between economic growth and the variables representing economic integration were estimated by ordinary least square. The results show that globalization, measured by the KOF index, promotes economic growth and Vietnam has gained from integrating into the global economy. The overall index of globalization had positively and significantly impacted the economic growth in Vietnam. The results also indicated that economic globalization had a significantly positive effect on economic growth in the period examined. The study further revealed that foreign direct investment and the exchange rate affect economic growth positively whereas balance of trade affects economic growth negatively.

The Impact of Foreign Direct Investment (FDI) on Economic Growth (EG) : Evidence from Djibouti

2021 ◽  
Vol 9 (10) ◽  
pp. 701-706
Author(s):  
Nashwa Maguid Hayel
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
International Development ◽  
Direct Investment ◽  
Time Series Data ◽  
Developed Countries ◽  
Least Square ◽  
Series Data ◽  
Study Results ◽  
The Impact

Abstract: The achievement of EG and development is considered the core objective for both Developing Countires (DCs) and Least Developed Countries (LDCs), so countries try to get adequate funding to achieve this goal through optimal macroeconomic policies and different strategies. Countries prefer other mechanisms with less burden and cost to achieve economic growth, such as FDI flows. International development-oriented institutions such as WB and IMF recommend and consider FDI flows are the most important factors of the modern technology transfer, management, and know-how, which is necessarily needed in the local investment projects in poor countries, so FDI represents optimal external sources of growth. The objective of this study is to explain the impact of FDI on the EG of Djibouti. To achieve this objective the study used a secondary annual time series data for the period 1985-2019 by the method of Ordinary Least Square (OLS). The study results showed that FDI in the case of Djibouti tends to be statistically insignificant effects and a limited impact on Djibouti‘s EG, Moreover,other factors such as the Human Development Index(HDI), and Gross Fixed Capital Formation(GFCF), Trade Openness(TOP) shows significant effects on the Gross Domestic Product (GDP). Finally, the Consumer Price Index (CPI) has no significance in the EG of Djibouti. The findings provide critical information to Djibouti policy decision-makers to make an informed decision with regard to attracting investment sectors and policies in encouraging foreign investors to invest in the country. KEYWORDS: Foreign Direct Investment, Economic Growth, Djibouti, Empirical Analysis.

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