The Determinants of the Foreign Direct Investment on the Macroeconomic Variables: The Case of the Algerian Economy

2018 ◽  
Vol 3 (1) ◽  
pp. 5-11
Author(s):  
Ahmed Smahi
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Empirical Analysis ◽  
Direct Investment ◽  
The Political ◽  
Annual Data ◽  
Bounds Testing ◽  
Macroeconomic Variables ◽  
Long Run

Foreign direct investment in Algeria as a percentage of GDP represented 0.9% during the last decade. The goal of this study is to assess the effect of Foreign Direct Investment on Algerian economy through an empirical analysis by applying the bounds testing ARDL and ECM-ARDL using annual data for the period 1970-2014. As far as the role of FDI is concerned, we shall try to highlight its effect that may show causal relationships to non-hydrocarbon GDP, non-hydrocarbon export, industry and employment in long run. Our estimation of an ARDL model indicates that the political and macroeconomic stability are not enough to attract FDI to help non-hydrocarbon sectors drive economic growth.

scholarly journals ECONOMIC GROWTH IN INDIA: "DOES FOREIGN DIRECT INVESTMENT INFLOW MATTER?"

2003 ◽  
Vol 48 (02) ◽  
pp. 151-171 ◽  
Author(s):  
DUKHABANDHU SAHOO ◽  
MAATHAI K. MATHIYAZHAGAN
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Annual Data ◽  
Foreign Direct Investment Inflow ◽  
Elasticity Coefficient ◽  
Long Run ◽  
Integration Test ◽  
Opening Up

The main objective of this paper is to examine the role of Foreign Direct Investment (FDI) in promoting the growth of the economy via export promotion by using the annual data from 1979–80 to 2000–01. This study uses the Johansen co-integration test and the results demonstrate that there is a long run relationship between Gross Domestic Product (GDP), FDI and Export (EX). The same relationship is also established when the Index of Industrial Production (IIP) replaces GDP. However, the positive elasticity coefficients between FDI, GDP and FDI, IIP are less than the positive elasticity coefficient between EX, GDP and EX, IIP. It implies that EX plays a comparatively better role in the growth of the Indian economy than FDI. Thus, on the eve of India's plan for further opening up of the economy, it is advisable to open up the export-oriented sectors so that a higher growth of the economy can be achieved through the growth of these sectors.

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 The role of foreign direct investment in economic growth of Nigeria

2020 ◽  
Vol 28 (2) ◽  
pp. 357-366
Author(s):  
Michael Madojemu
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Unit Root Test ◽  
Domestic Investment ◽  
Econometric Methods ◽  
Long Run ◽  
Security Challenges ◽  
Adf Test

The paper investigates the relevance of foreign direct investment (FDI) as a factor inhibiting economic growth in Nigeria. This paper inspects the sectorial influence of FDI in manufacturing, mining, oil and the telecommunications sectors on economic growth in Nigeria based on theoretical framework founded on the standard growth accounting theory, detailed analysis of the sectorial FDI over the period 1981 and 2017 was carried out. Various econometric methods are employed, such as the ADF test, Dickey and Fuller test (1979), PP test (Phillips and Perron, 1988) are used for the unit root test, and the Shahbaz and Rahman (2010) method is used for the long-run relationship between the foreign direct investment and economic growth. The paper also adapted the framework provided by M.B. Obwona (2004). The paper formalizes a mechanism of recommendations to allow for the influence of foreign direct investment in the transmission of socio-economic growth generated in Nigeria. In conclusion, government should provide an enabling environment that will encourage foreign investors to invest in Nigeria economy by addressing the security challenges in the country, understanding that investment friendly environment will improved regulatory framework as well as encourage domestic investment.

scholarly journals The Impact of Human Capital and Foreign Direct Investment on Economic Growth: An Empirical Study on Jordan

2020 ◽  
Vol 10 (2) ◽  
pp. 182
Author(s):  
Mustafa Mohammad Alalawneh
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Advanced Technology ◽  
Bounds Testing ◽  
Long Run ◽  
Auto Regressive ◽  
Human Capital Index ◽  
The Impact

Human capital is a real factor in improving the investment climate and attracting foreign investment. FDI also increases human capital in the host country through the transfer of advanced technology and the rehabilitation of local labor. The importance of the study comes from Jordan's serious endeavor to attract foreign direct investment and to present itself as a rich country in human and qualified capacities. This study examines the effect of human capital and foreign direct investment on economic growth in Jordan employing Auto Regressive Distributed Lags Bounds Testing (ARDL BT) co-integration method for the spanning period from 1984 to 2018. The results indicate that there is a long- run relationship among variables. The results showed that there is a negative and statistically significant effect of human capital index (HCI) on economic growth (GWP) in the long run, and a positive and statistically significant effect of FDI (GFDI) on economic growth (GWP) in the long run. The estimation results indicate that a 1% increase in (HCI) decreases (GWP) by 0.272%, and a 1% increase in (GFDI) increases (GWP) by 0.006%. This study is one of the few studies that highlight the challenges facing both HC and FDI in increasing economic growth in Jordan and provides some recommendations.

scholarly journals OUTWARD FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN CHINA: EVIDENCE FROM ASYMMETRIC ARDL APPROACH

2018 ◽  
Vol 19 (5) ◽  
pp. 706-721 ◽  
Author(s):  
Usman Ali ◽  
Wei Shan ◽  
Jian-Jun Wang ◽  
Azka Amin
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Annual Data ◽  
Symmetric Model ◽  
Outward Foreign Direct Investment ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Short Run ◽  
Overseas Investment

The current study explored the dynamics between economic growth and overseas investment, using time series annual data from China. For empirical analysis, we utilized asymmetric ARDL technique, which documents the potential asymmetric effects of outward foreign direct investment on economic growth in both the long run and short run. The empirical results suggest that ignoring the intrinsic asymmetries may conceal the true information about the equilibrium relationship among the variables and thus lead to misleading results. Particularly, the findings revealed that economic growth in China responds positively but differently to an increase and decrease in its overseas investment. The empirical evidence obtained through asymmetric model seemed to be superior to that of symmetric model and thus leads to more efficient policymaking to achieve sustainable economic development. Our study contributes to the existing literature by providing new insights on the outward foreign direct investment-led growth hypothesis. The findings suggest that firms investing abroad can bring source country benefits by securing access to key input factors and accessing advanced foreign technology.

scholarly journals The Nexus of Selected Macroeconomic Variables toward Foreign Direct Investment: Evidence from Indonesia

2021 ◽  
pp. 110-115
Author(s):  
Noris Fatilla Ismail ◽  
Suraya Ismail
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Domestic Investment ◽  
Fdi Inflows ◽  
Macroeconomic Variables ◽  
Distributed Lag ◽  
Long Run ◽  
Macroeconomic Stability

Foreign direct investment (FDI) inflows are a major instrument of economic growth in developing countries. Indonesia is one of the developing countries that has received more FDI with macroeconomic stability. The macroeconomic stability indicator is seen as an important factor in driving economic growth and attracting FDI inflows in Indonesia. Therefore, this study examines the relationship of selected macroeconomic variables toward the FDI in Indonesia over the period 1980-2019. Using Autoregressive Distributed Lag (ARDL), the empirical results showed that market size, domestic investment, government spending and foreign exchange rate are key factors influencing long-run FDI inflows. However, financial development revealed no relationship with FDI inflows in Indonesia. Overall findings indicated that macroeconomic variables influence FDI inflows. These findings guided policymakers in formulating new policies to ensure macroeconomic indicators' stability in driving economic growth.

scholarly journals Unleashing the Indirect Influence of FDI in Environmental Degradation via Financial Development and Economic Growth. New Evidence from Asian Countries

2021 ◽  
Author(s):  
Ghulam Muhmmad Qamri ◽  
Bing Sheng ◽  
Rana Ejaz Ali Khan ◽  
Wasisfah Hanim
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Environmental Degradation ◽  
Environmental Quality ◽  
Direct Investment ◽  
The Political ◽  
Asian Countries ◽  
Mediating Role

Abstract Background:Scholars in developed and emerging economies have widely tested the interactions between foreign direct investment, financial development, economic growth and environmental degradation. Despite a number of empirical and review studies, it is not yet wrap up either the associations are negative, positive, direct or indirect. Additionally, minor attention is given to the indirect role of foreign direct investment in environmental degradation; perhaps no study has yet demonstrated the mediating role of financial development and economic growth between foreign direct investment and environmental degradation in Asian economies. Referring to the fragmented outputs and consequences as well as lacking the indirect role, the present study examines the influence of foreign direct investment on environmental degradation with the mediating role of financial development and economic growth. Results:Secondary data of 21 Asian countries from 1980-2018 were gathered from World Bank Indicators and then performed STATA to test the paths. Our findings are slightly different from the studies conducted in developed economies. The results indicate that foreign direct investment significantly improves environmental quality by deteriorating environmental pollution. It also significantly improves economic growth in the selected regions. Surprisingly, our study shows that foreign direct investment has a significant negative influence on financial development in the Asian regions. Both financial development and economic growth significantly negatively influence environmental degradation in Asian regions. However, financial development partially mediates while economic growth does not play any mediating role between foreign direct investment and environmental degradation in the Asian countries. Trade openness and population growth as control factors do not show any significant role in the model. Conclusions:This research recommends policymakers to focus on the inflow of foreign direct investment in order to enhance economic growth and environmental quality. It is strongly suggested for policymakers to attenuate the political intervention (e.g. ensure the political stability) in the inflow of foreign direct investment, so financial resources can be impartially distributed in the industrial sector and thus the nations will have an effective financial development system. Other implications have described.

scholarly journals Foreign Aid—Blessing or Curse: Evidence from Pakistan

2007 ◽  
Vol 46 (3) ◽  
pp. 215-240 ◽  
Author(s):  
Muhammad Arshad Khan ◽  
Ayaz Ahmed
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Foreign Direct Investment ◽  
Foreign Aid ◽  
Empirical Analysis ◽  
Direct Investment ◽  
Domestic Investment ◽  
Socio Economic Development ◽  
The Empirical Analysis

The role of foreign aid in promoting economic growth is a debatable issue and remains unsettled at both theoretical and empirical levels. Pakistan has received a substantial amount of foreign aid since its Independence in 1947 but little improvement has been observed in its socio-economic development. This study considers the question as to whether foreign aid is a blessing or a curse for Pakistan. The empirical analysis is based on the ARDL cointegration approach. We examine the aid-growth link at the aggregate and disaggregate levels for the period 1972-2006. The results show negative and insignificant effects of foreign aid on the growth at the aggregate as well at the disaggregate level. The findings further suggest that domestic investment, export growth, and inflows of foreign direct investment are important contributors in enhancing economic growth in Pakistan.

scholarly journals The role of foreign direct investment and trade on carbon emissions in Turkey

2017 ◽  
Vol 8 (1) ◽  
pp. 8-17 ◽  
Author(s):  
Gizem Kaya ◽  
M. Özgür Kayalica ◽  
Merve Kumaş ◽  
Burc Ulengin
Keyword(s):  
Foreign Direct Investment ◽  
Co2 Emissions ◽  
Direct Investment ◽  
Trade Openness ◽  
Kuznets Curve ◽  
Annual Data ◽  
Long Run ◽  
Short Run ◽  
Relationship Of

This study aims to observe the long run and short run effects of gross domestic product, foreign direct investment inflows and trade on CO2 emissions and causality relationships between these factors, using annual data for the period of 1974-2010. The empirical results demonstrate that the inverted U-shaped relationship of environmental Kuznets curve is valid for Turkey. In addition, there are positive long run effects of foreign direct investment and trade openness on CO2 emissions. The authors also find a bidirectional causality relationship between CO2 emission and FDI.

scholarly journals The Accessing Foreign Aid’s Long Run Contribution to Economic Growth of Pakistan: An Evidence from Time Series Data

2021 ◽  
Vol 3 (1) ◽  
pp. 25-36
Author(s):  
Hina Ali ◽  
Javeria Masood ◽  
Afifa Sadar Ud Din
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Foreign Aid ◽  
Direct Investment ◽  
Time Series Data ◽  
Development Aid ◽  
Series Data ◽  
Annual Data ◽  
Long Run ◽  
Domestic Savings

Purpose: This research examines the effectiveness of foreign aid on Pakistan’s economic growth.  The foreign aid efficiency is still under question. Some researches show positive affiliation of foreign aid with economic growth while some show negative affiliation. If foreign aid is not replacing or used as a substitute for domestic savings then foreign aid is useful for growth. To fill the two gaps of the economy the Two-Gap theory suggest that poor nations have to depend on overseas funds. Those two gaps are the Savings-Investment Gap and Import-Export Gap. There’re many kinds of international funds. Like foreign loans, development and non-development aid, FDI, and technological help. But underdeveloped nations like Pakistan have not a favorable speculation policy. Therefore, these nations are dependent on international aid and balance quite than foreign direct investment. Design/Methodology/Approach: For the analysis of this study the time era used is 1974 to 2016. The GDP is the dependent variable. Independent variables are population growth, foreign aid, inflation, foreign direct investment (FDI), and domestic savings. The annual data is collected from different sources. The technique for analysis is OLS and ARDL bound testing. Findings: Concluding remarks show that in Pakistan foreign aid affects economic growth negatively. Implications/Originality/Value: The  current  study  was  based  on the least  considered  variables  and  the  pioneer  in  testing  the  complex relationship through OLS and ARDL estimation.

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