scholarly journals Analysis of Capital Flight in Developing Countries: A Study on Turkey between 1980 and 2010

2013 ◽  
Author(s):  
Ali Özer ◽  
Aslı Cansın Doker ◽  
Adem Türkmen
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Consumer Price Index ◽  
External Debt ◽  
Estimation Method ◽  
Ordinary Least Squares ◽  
Capital Flight ◽  
Causality Test ◽  
Macroeconomic Variables ◽  
Long Run

The aim of this study is to determine whether there is a relationship between Capital flight and some macroeconomic variables by using anual data between 1980 and 2010 in Turkey. Capital flight measured by World Bank (1985) method, was used as dependent variable and external debt, foreign direct investment, uncertainty, real GDP growth, exchange rates, trade balance and consumer price index were used as independent variables. Ordinary Least squares estimation method, Johansen-Jeselius cointegration test, Granger causality test and variance decomposition results produced by VEC model were used in the study. After those econometrics and economics analysis, this paper put forward that there is a long run relationship between some macroeconomic variables and capital flight.The results show external debt, foreign direct investment inflows, and foreign reserves to be the major effector of capital flight.

scholarly journals Foreign Direct Investment, External Debt, and Balance of Payment: A Causality Analysis for Bangladesh

2020 ◽  
Author(s):  
Muhammad Mahmud Mostafa
Keyword(s):  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Negative Impact ◽  
External Debt ◽  
Causality Analysis ◽  
Causality Test ◽  
Long Run ◽  
Significant Negative Impact ◽  
Short Run

The purpose of this study is to analyze the causal relationship of external debt and balance of payment with foreign direct investment (FDI) in Bangladesh for the period of 1980 to 2017 through the application of Johansen Cointegration technique, Vector Error Correction Model (VECM), and Granger Causality approach. Results of cointegration and VECM indicate a significant long-run relationship between dependent (FDI) and independent variables (external debt and balance of payment). External debt is found to have a significant negative impact on FDI in the long-run, but it is found insignificant in the short-run. In contrast, the balance of payment has a significant positive effect on FDI both in the long-run and short-run. Results of the Granger causality test reveal that there exists bidirectional short-run causality between the balance of payment and FDI; that is, both the balance of payment and FDI affect each other. But no unidirectional or bidirectional short-run causality is found between external debt and FDI. Keywords: FDI, external debt, balance of payment, cointegration, VECM, causality

scholarly journals Macroeconomic Impact of Foreign Direct Investment in Sri Lanka

2019 ◽  
Vol 8 (2S10) ◽  
pp. 252-259
Keyword(s):  
Foreign Direct Investment ◽  
Sri Lanka ◽  
Direct Investment ◽  
Time Lag ◽  
Estimation Method ◽  
Ordinary Least Squares ◽  
Annual Data ◽  
Domestic Investment ◽  
Macroeconomic Variables ◽  
The Impact

This research is aimed at tracing the impact of Foreign Direct Investment (FDI) in promoting macroeconomic variables such as gross domestic production, industrial production, total domestic investment, exports, imports, Board of Investment approved exports, Board of Investment approved imports and Board of Investment approved employments by using the time series annual data for 1978 - 2018 in Sri Lanka. Multiple Regression Analysis was used to estimate the impact of FDI on selected macroeconomic variables. Estimation method was Ordinary Least Squares. EViews 10 software were used for data analysis. The empirical evidence shows that there is a statistically significant positive impact of FDI on selected macroeconomic variables except in the case of imports. However, this study further reveals that the actual impact on macroeconomic variables can be felt after certain time lag. But the impact on total domestic investment was realized immediately. Further, this research has identified various problems faced in attracting FDI including ideal sector identification and the appropriate recommendations have been presented in order to realize the major benefits from FDI inflow into the country.

scholarly journals Hypotheses Testing: Capital Flight and Human Development Index in Nigeria

2021 ◽  
pp. 173-190
Author(s):  
Emmanuel Uzoma Makwe ◽  
Augustus N. Gbosi ◽  
Clever A. Gbanador
Keyword(s):  
Foreign Direct Investment ◽  
Human Development ◽  
Human Development Index ◽  
Direct Investment ◽  
External Debt ◽  
Capital Flight ◽  
National Bureau ◽  
Development Index ◽  
Long Run ◽  
Financial Account

This study examined Capital Flight and human development index in Nigerian. Capital Flight was proxied by foreign direct investment abroad, external debt servicing, external reserves and capital and financial account deficits. Based on the study objectives, relevant literature were reviewed and evaluated. Relevant data were extracted from the annual Statistical Bulletin of the Central Bank of Nigeria and the National Bureau of Statistics. Unit root test was conducted using Augmented Dickey Fuller method which revealed that the variables were integrated at level and first difference: necessitating the use of autoregressive distributive lag/bonds test to explore the long run relationship existing among the variables in the model and the result showed that the variables in the model were co-integrated thus we proceeded in evaluating the long run as well as the co-integrating form in the model. From the result of the various tests, it was revealed that capital and financial account deficit, external debt servicing and external reserve were positively related to human development index while foreign direct investment outflows was negatively related to human development index. Also, capital and financial account deficit, external reserve and foreign direct investment outflow were significant while external debt servicing was not significant. Based on the findings from the analysis, the study recommended amongst others, that external debt acquired should be judiciously used for infrastructural development that would encourage investments which would ultimately bring about economic growth as well as enhance human development in Nigeria.

scholarly journals Globalisation and Economic Growth in West Africa

2021 ◽  
Author(s):  
Benjamin Wanger ◽  
Osman Nuri Aras
Keyword(s):  
Foreign Direct Investment ◽  
West Africa ◽  
Gross Domestic Product ◽  
Least Squares ◽  
Direct Investment ◽  
Ordinary Least Squares ◽  
Domestic Product ◽  
African Countries ◽  
Causality Test ◽  
Long Run

Abstract Economic integration among countries could be beneficial to trading partners if properly handled through appropriate regulation of production, distribution, and consumption. However, it appears developing countries often do not benefit from their relations with other countries at advanced stages of developed. It is in view of this that this research was conducted with concentration on West Africa. Panel Cointegration techniques including Fully Modified Ordinary Least Squares, Dynamic Ordinary Least Squares and Dumitrescu-Hurlin Panel Causality Test were applied using time series on Gross Domestic Product, Exports, Imports and Foreign Direct Investment of eight West African countries from 1960 – 2019. while a positive and significant long run causal relationship was found between Exports, Imports as aspects of globalisation and Gross Domestic Product, there was an observed negative long run relationship between Foreign Direct Investment and Gross Domestic Product. Export promotion, hight import tariffs, the local content initiative, liberal migration policies and strong regulatory machinery were recommended.JEL Codes: FGHO

scholarly journals Causal Links between Trade Openness and Foreign Direct Investment in Romania

2021 ◽  
Vol 14 (3) ◽  
pp. 90
Author(s):  
Malsha Mayoshi Rathnayaka Mudiyanselage ◽  
Gheorghe Epuran ◽  
Bianca Tescașiu
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Trade Openness ◽  
Test Procedure ◽  
Real Effective Exchange Rate ◽  
Foreign Direct Investments ◽  
Causality Test ◽  
Fdi Inflows ◽  
Distributed Lag ◽  
Long Run

In this increasingly globalized era, foreign direct investments are considered to be one of the most important sources of external financing for all countries. This paper investigates the causal relationship between trade openness and foreign direct investment (FDI) inflows in Romania during the period 1997–2019. Throughout this study, Trade Openness is the main independent variable, and Gross Domestic Product (GDP), Real Effective Exchange Rate (EXR), Inflation (INF), and Education (EDU) act as control variables for investigating the relationships between trade openness (TOP) and FDI inflow in Romania. The Auto Regressive Distributed Lag (ARDL) Bounds test procedure was adopted to achieve the above-mentioned objective. Trade openness has negative and statistically significant long-run and short-run relationships with FDI inflows in Romania throughout the period. Trade openness negatively affects the FDI inflow, which suggest that the higher the level of openness is, the less likely it is that FDI will be attracted in the long run. The result of the Granger causality test indicated that Romania has a unidirectional relationship between trade openness and FDI. It also showed that the direction of causality ran from FDI to trade openness.

scholarly journals Foreign Direct Investment, Financial Development and Economic Growth Evidence from Saudi Arabia

2017 ◽  
Vol 8 (4) ◽  
pp. 228 ◽  
Author(s):  
Najeeb Muhammad Nasir ◽  
Mohammed Ziaur Rehman ◽  
Nasir Ali
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Impulse Response Function ◽  
Saudi Arabian ◽  
Causality Test ◽  
Long Run ◽  
Oil Resources ◽  
Integration Test

This study is an effort to explain and establish a relationship among foreign direct investment, financial development and economic growth in Saudi Arabian context for the period of 1970 to 2015 by employing Vector Auto Regression (VAR) and modified Granger Casualty Models. The result of Johansen co-integration test illustrates that no long run co-integration can be established among the variables. VAR has established a link between economic growth, financial development and foreign direct investment. The Granger causality test also confirms that economic growth causes foreign direct investment and financial development which is a unidirectional causality running from economic growth towards foreign direct investment and financial development. No significant causality can be observed empirically between foreign direct investment and financial development. This feature can be attributed to the fact that Saudi Arabian economy is still heavily dependent on its oil resources which is the driving force behind growth. Impulse Response Function has been utilized in order to observe the response to the shocks among the variables.

scholarly journals Macroeconomic Variables and Foreign Direct Investment Inflows in Turkey

2019 ◽  
Vol 8 (2) ◽  
Author(s):  
Saliha Meftah ◽  
Abdelkader Nassour
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Short Term ◽  
Causality Test ◽  
Correction Model ◽  
Vector Error Correction ◽  
Macroeconomic Variables ◽  
Vector Error ◽  
Causality Relationship

Foreign direct investment (FDI) is an essential factor in the development of a country. This study aims to examine what factors influence foreign direct investment. By using the vector error correction model, the research shows that there is a long-term causality relationship between exchange rates and inflation with FDI. However, in the short term, there are no variables that affect FDI. Besides, the Granger causality test shows causality in the direction of GDP and FDI, while other variables do not have causality. This research has implications for policymakers to pay attention to macroeconomic variables in increasing the flow of foreign direct investment.

scholarly journals Relationship Economic Growth with Foreign Direct Investment

2020 ◽  
Vol 3 (3) ◽  
pp. 49-68
Author(s):  
Prince Charles Heston Runtunuwu
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Direct Investment ◽  
Positive Impact ◽  
Secondary Data ◽  
Causality Test ◽  
Long Run ◽  
Causality Relationship ◽  
The One

This study aims to determine the one-way causality relationship between foreign investment and economic growth, a one-way causality relationship between economic growth and foreign investment, and a two-way causality relationship between foreign investment and economic growth in Indonesia. This was conducted in Indonesia, the data are secondary data taken using the method time series from 1971 to 2018 from the official websites, the Investment Coordinating Board, and literature sources, Foreign Investment and Gross Domestic Product. (1) in the long run the Economic Growth variable has a significant effect on Foreign Direct Investment, and vice versa; and (2) the Foreign Direct Investment variable has a significant effect on Economic Growth; (3) in the short term, the Economic Growth variable has an influence on Foreign Direct Investment, and vice versa; and the Foreign Direct Investment variable has an influence on Economic Growth. It is possible to have a better long-term relationship, bringing positive impact on economic growth in Indonesia when investment in Indonesia increases. Conversely, when economic growth decreases, it means that foreign investment is also low. Granger Causality test, shows a two-way causality relationship between Economic Growth and Foreign Direct Investment and vice versa. It is necessary to maintain growth to attract foreign direct investment, as well as foreign investment. Investment climate needs to be improved enabling to invest in Indonesia.

scholarly journals Causal Relationship between Foreign Direct Investment and Economic Growth in Nigeria: 1970-2013

2015 ◽  
Vol 7 (11) ◽  
pp. 230 ◽  
Author(s):  
Uwazie I. U. ◽  
Igwemma A. A. ◽  
Nnabu Bernard Eze
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Unit Root ◽  
Direct Investment ◽  
Developing Economies ◽  
Unit Root Test ◽  
Annual Data ◽  
Policy Reforms ◽  
Causality Test ◽  
Long Run

Foreign direct investment is presumed to play immense role in economic growth in both developed and developing economies. This assumption has motivated the army of studies to actually determine the nexus between foreign direct investment and economic growth in Nigeria. But these studies were not unified on the direction of the causation, hence the need for the study. To effectively analyze the result, the study employs vector error correction model method of causality to analyze the annual data for the periods of 1970 to 2013. The Augmented Dickey-Fuller (ADF) unit root test show presence of unit root at level but stationary after first difference. The Johansen cointegration test confirms that the variables are cointegrated while the granger causality test affirms that foreign direct investment and economic growth reinforce each other in the short run in Nigeria. Also, it is reported that foreign direct investment granger cause economic growth both in the short and long run in Nigeria. Based on these findings, the study advocates the adoption of aggressive policy reforms to boost investors’ confidence and promotion of qualitative human capital development to lure FDI into the country. It also suggests the introduction of selective openness to allow only the inflow of FDI that have the capacity to spillover to the economy. These will attract FDI and boost economic growth in Nigeria.

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.

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