Impact of Gross Capital Formation and Foreign Direct Investment on Economic Growth in Rwanda (1990-2017)

This paper examines the role of foreign direct investment (FDI) and capital formation as mechanisms of trade openness for economic growth in Malaysia. This study found that foreign direct investment and capital formation are indicators of trade openness. Thus, this study proposes that policymakers should develop policies so that Malaysia could gain more benefits from trade openness and subsequently, accelerate the country’s economic growth.

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Impact of Trade Openness on Economic Growth: A Case Study of Pakistan'

Review of Economics and Development Studies ◽

10.26710/reads.v3i1.165 ◽

2017 ◽

Vol 3 (1) ◽

pp. 57-68

Author(s):

Rashid Ahmad ◽

Kashif Raza ◽

Sobia Saher

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Negative Impact ◽

Trade Openness ◽

Capital Formation ◽

Fixed Capital ◽

Series Data ◽

Fixed Capital Formation ◽

The Impact

Purpose: This paper estimates the impact of trade openness and economic growth in Pakistan by using time series data from period of 1975-2014. Econometric method was applied to estimate the impact of trade openness on economic growth. Gross fixed capital formation (proxy of investment), Foreign direct investment, Imports, Exports & trade openness (proxy of trade openness to check the volume of trade of a country) is used as explanatory variables while gross domestic product is treated as dependent variable in this study. Johansson co. integration approach developed by Johannes & Jeslius (1988) is used to evaluate the long run relationship among variables in this study. The results suggest that trade openness, imports, exports and foreign direct investment cast have positive impact on economic growth while on the other hand; gross fixed capital formation &labor force has negative impact on economic growth.

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THE RELEVANCE OF REMITTANCES IN FOSTERING ECONOMIC GROWTH IN THE WEST BALKAN COUNTRIES

Ekonomika ◽

10.15388/ekon.2017.2.10989 ◽

2017 ◽

Vol 96 (2) ◽

pp. 28-42 ◽

Cited By ~ 1

Author(s):

Rahmije Mustafa Topxhiu ◽

Florentina Xhelili Krasniqi

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Least Squares Method ◽

Positive Impact ◽

Ordinary Least Squares ◽

Capital Formation ◽

The West ◽

Balkan Countries ◽

Communist Countries

The remittances of diaspora workers, resulting from international migration, have attracted the attention of academics and policymakers for their role and importance in macroeconomic variables in their countries of origin. The purpose of the paper is to explore the effects of remittances and other variables, such as exports, capital formation, foreign direct investment, and labor force on economic growth in the six former Western Balkan communist countries (Albania, Kosovo, Macedonia, Montenegro, Bosnia and Herzegovina and Serbia). This study utilizes a strongly balanced panel data over the 2005-2015 period for the six Western Balkan countries using the ordinary least squares method (OLS), i.e., the Pooled Regression Model, to evaluate the parameters. According to the regression results, we can conclude that remittances have a positive impact on economic growth in the West Balkan countries, so remittances can foster economic growth in those countries. Also, we find a statistically significant positive relationship between economic growth and other variables included in the model, such as exports, capital formation, and labor. The relationship between economic growth and foreign direct investment has turned out to be statistically insignificant and negatively related.

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Impact of foreign direct investment on economic growth in Africa

Problems and Perspectives in Management ◽

10.21511/ppm.14(2-2).2016.04 ◽

2016 ◽

Vol 14 (2) ◽

pp. 289-297 ◽

Cited By ~ 3

Author(s):

Olawumi D. Awolusi ◽

Olufemi P. Adeyeye

Keyword(s):

Economic Growth ◽

South Africa ◽

Human Capital ◽

Foreign Direct Investment ◽

Technology Transfer ◽

Direct Investment ◽

Central African Republic ◽

Capital Formation ◽

International Technology Transfer ◽

African Countries

Several studies have been conducted to examine the influence of foreign direct investment (FDI) inflow on economic growth. Indeed, the overall evidence is best characterized as mixed. This paper investigates the effect of FDI on economic growth in some randomly selected African economies from 1980 to 2013, using a modified growth model by Agrawal and Khan (2011). This model consists of Gross Domestic Product, Human Capital, International Technology Transfer, Labor Force, FDI and Gross Capital Formation (GCF). Ordinary least squares and generalized method of moments were used as the estimation techniques. Of all the results, only Gross Capital Formation, Human Capital, and International Technology Transfer in the Central African Republic were found not to have any statistically significant influence on economic growth. In general, the impact of FDI on economic growth in African countries is limited or negligible. Consequently, this study observes that a 1% increase in FDI would result in a 0.12% increase in GDP for South Africa, a 0.05% increase in Egypt, a 0.03% increase in Nigeria, a 0.02% increase in Kenya, and a 1% increase in GDP in the Central African Republic. The findings also reveal that South Africa’s growth is more affected by FDI than the other four countries. The study also provides possible reasons behind South Africa’s great show of FDI and the lessons other African countries could learn from South Africa better utilization of FDI. This study integrates the related drivers of the effectiveness and success of FDI

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

The American Economist ◽

10.1177/0569434520938673 ◽

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

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The Influences of FDI, GFCF, OPEN on Vietnamese Economic Growth

International Journal of Asian Business and Information Management ◽

10.4018/ijabim.20210701.oa26 ◽

2021 ◽

Vol 12 (3) ◽

pp. 1-13

Author(s):

Toan Duc Le ◽

Phu Huu Nguyen ◽

Yen Thi Phi Ho ◽

Thuyen Ngoc Nguyen

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

World Bank ◽

Direct Investment ◽

Trade Openness ◽

Capital Formation ◽

Fixed Capital ◽

Annual Data ◽

Fixed Capital Formation ◽

Short Run

The aim of study is to research the influences of Foreign Direct Investment (FDI), Gross Fixed Capital Formation (GFCF), Trade Openness of the Economy (OPEN) on Vietnam economic growth. This study uses the annual data for the period 1986 to 2019, obtained from World Bank and Vietnam General Statistics Office. The study shows that FDI, GFCF and OPEN together influence to Vietnam economic growth in the period 1986 – 2019 at significant level of 5%; in which the FDI and GFCF determinants have influenced greatly. In the short–run, the results indicate that there are bidirectional causality relationships running between FDI and GDP, OPEN and GDP, OPEN and GFCF, and there are undirectional causality relationships running from GDP to GFCF, from GFCF to FDI, from FDI to OPEN. The study’s results confirm that FDI as more reliable and less violate source of capital and can extend the Vietnam economic growth. According to the study’s results, the authors suggest some recommendations to increase the Vietnam economic growth.

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Impact of Foreign Direct Investment on Economic Growth of Nepal

Tribhuvan University Journal ◽

10.3126/tuj.v33i2.33608 ◽

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.

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The Impact of Foreign Direct Investment, Capital Formation, Inflation, Money Supply and Trade Openness on Economic Growth of Asian Countries

iRASD Journal of Economics ◽

10.52131/joe.2020.0101.0013 ◽

2020 ◽

Vol 2 (1) ◽

pp. 25-34

Author(s):

Xiuyun Yang ◽

Muhammad Nouman Shafiq

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Money Supply ◽

Direct Investment ◽

Fixed Effects ◽

Trade Openness ◽

Capital Formation ◽

Fixed Effects Model ◽

Asian Countries ◽

The Impact

Economic growth is currently an essential phenomenon for emerging countries worldwide and has gained the researchers' intentions. Thus, the current study aims to examine the role of foreign direct investment (FDI), capital formation, inflation, money supply, and trade openness on the economic growth of Asian countries. The data has been extracted from the twenty emerging Asian countries from 2007 to 2018 using the most popular database named World Development Indicators (WDI). The fixed-effects model, along with the robust standard error, has been used for checking the impact of predictors on the economic growth of Asian countries. The results revealed that the predictors such as FDI, capital formation, money supply, and trade openness have positive association with economic growth, while inflation has a negative association with the economic growth of Asian countries. These findings are suitable for the new arrivals who want to examine this area in the future and for the regular traders who want to develop policies related to economic growth.

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