Therefore, the purpose of this study is to examine the cointegration and causal relationship between fdi and gdp growth over the period of. Foreign direct investment, information and communication. The effect of foreign direct investment on economic growth. This paper investigates the relevance of external debt as a factor inhibiting economic growth gains to be accrued from foreign direct investment fdi. The impact of foreign direct investment on economic growth. The relationship between foreign direct investment fdi and economic growth in recipient economies remains one of the hottest debates. The main objective is to contribute to a better understanding of the reality of aidgrowth relationship in vietnam, how and through which channels aid may influence outcomes, and what make aid works better or less well. However, when accounting for the different average growth performance across sectors.
This study puts forward whether the relationship between fdi inflow and gdp in the region of economic cooperation organization eco is coherent with the theoretical expectations. This paper examines the relation between foreign direct investment fdi and economic growth and the role of natural resources in this relation over the period from 1980 through 2012 with special reference to 6 persian gulf countries. Maria carkovic and ross levine university of minnesota may, 2002 abstract. This paper investigates the effect of foreign direct investment on economic growth in selected african economies south africa, nigeria, egypt, kenya, and central african republic from 1980 to. This paper investigates whether foreign direct investment fdi affects economic growth based on a panel of data for 84 countries over the period 197099. In the aggregate level, fdi is observed to have a positive effect on economic growth. Impact of foreign direct investment on nigeria economic. There is significant relationship between economic growth and foreign direct investment inflows fdi in. In this regard, rwanda has actively attracted fdi by creating and sustaining a high conducive investment climate through important reforms which make it easier for businesses to get started, get loans, pay taxes, etc. Foreign direct investment fdi is argued to play a pivotal role in accelerating economic growth eg of a host country especially in developing and. The relationship between investment and economic growth in. They find that there is a strong paired relationship between fdi and economic growth in both developing and developed countries, not only through just fdi but also.
A model of endogenous growth first highlights the transfer of foreign technology as a key determinant of economic growth, and suggests that economic growth may conversely influence the inflows of foreign capital. Empirical relationship between foreign direct investment. Impact of foreign direct investment on the economic growth. Pdf foreign direct investment and economic growth in. Foreign direct investment and economic growth etheses.
It theoretically analyses the relation and makes use of a panel data set, which is created by the author, to test the relation empirically by making use of growth. Pdf analyzing the relationship between foreign direct. Organization for economic cooperation and development countries. The dynamics and determinants of foreign direct investment. As confirmed in the literature, many studies support the growth impact of fdi, but some do not. This study employs least squares to examine the possible effects among the investigated series. The augmented dickey fuller test was used to test for stationarity amongst the series. Foreign direct investment fdi is a form of international investment that has been recently breaking through all around the world, especially during the last decade, which has been driven by globalization and the opening of world economies chiriladonciu.
Section 2 presents brief empirical literature while, section 3 provide the theoretical models linking fdi and economic growth. Second, we use a dynamic panel procedure with data averaged over. Foreign direct investment and economic growth literature. This study investigates the causal links between trade, economic growth and inward foreign direct investment fdi in china at the aggregate. Falki 2009 investigated the impact of foreign direct investment on the economic growth of pakistan by using production function based on the endogenous growth theory covering the period 19802006. Fdi has a critical significance, since of its competency and concrete paybacks to economic growth, employment creation.
Using quarterly time series data from 1998 to 2009, this paper examines the causality relationship between foreign direct investment, international trade and economic growth in pakistan. Recognising that fdi, notwithstanding the type, can contribute to economic growth and development, most countries including south africa are constantly working to attract it, and hence its demand has become highly competitive. This study examines the relationship between foreign direct investment and economic growth as well as some selected macroeconomic variables such as inflation, gross fixed capital formation, trade openness and government spending in ghana for the period 1983 to 2012 by means of time series analysis. Bidirectional causality between fdi and economic growth. Foreign direct investments have been identified as an important source of financing for developing countries. This paper uses new statistical techniques and two new databases to reassess the relationship between economic growth and fdi. The impact of foreign direct investment on economic growth and employment in south africa. The relationship between foreign direct investment fdi. Theoretical studies on fdi have led to a better understanding of the economic mechanism and the behavior of economic agents, both at micro and macro level allowing the opening of new areas of study in economic theory. This calls for this study which seeks to explore linkages between inflation, foreign direct investment and economic growth in ghana using annual time series data covering the period 1980 to 2011. This paper makes a brief analysis on the relationship between foreign direct investment and economic growth. The third line of researches has examined the relationship between foreign direct investment and energy consumption. Foreign aid, foreign direct investment and economic growth in subsaharan africa. Using time series data for a period of 20 years from 1994 to 20.
The work covered a period of 19812009 using an annual data from central bank of nigeria statistical bulletin. Finally, section four presents some concluding remarks. Causality relationship between foreign direct investment. A time series analysis the aim of this paper was an attempt to estimate the impact of foreign direct investment on economic growth and employment in south africa for a period of 24 years, thus from 1990 to 20. The relationship between foreign direct investment and. The causal relationship between foreign direct investment fdi and economic growth has been a subject of extensive debate in finance and economics by various authors with divergent and convergent views. Integration of a single market helped to create a dynamic process of free movement of goods, services, and free flow of capital and, as a result, attracted more foreign direct investment fdi. A study on the dynamic relationship between inflation. A dozen or so years later, foreign investment is still clearly increasing, contributing to the regions growing importance in the world. We find suggestive evidence that the complementary relationship between human capital and fdi is stronger for technology and capitalintensive fdi than for laborintensive fdi. The role of external debt in the foreign direct investment. Pdf the relationship between foreign direct investment. Trade, foreign direct investment and economic growth.
The research investigates the causality relationship between fdi, trade economic growth in pakistan. Impact of foreign direct investment and trade on economic growth foreign direct investment fdi and trade are often seen as important catalysts for economic growth in the developing countries. The effect of exchange rate and inflation on foreign direct investment and its relationship with economic growth in south africa. The relationship between foreign direct investment and economic growth of selected asean countries.
Foreign direct investment and economic growth in china. Foreign aid, foreign direct investment and economic growth. The effects of fdi on economic growth the accumulation of capital is an important determinant of economic. The findings revealed that there is a strong positive relationship between the fdi inflows and the gdp per capita for the studied period which covers 2008 to 2012, thus a positive effect on the economic growth. Impact of foreign direct investment and trade on economic. Pdf the relationship between gross domestic product and. The main purpose of this study is to study the relationship between economic growth, inflation, international trade and foreign direct investment. Foreign direct investment and gross domestic product. Despite the important role played by fdi in economic growth, a number of policymakers have. Despite there is many studies about the direction of the causal link between fdi and. Pdf relationships between economic growth, foreign. Abstract using a panel of chinese cities over the period 19912010, we examine the determinants of economic growth, focusing on the role of foreign direct investment. The existence of cointegration was tested by the engle. The present thesis investigates the relationship between foreign aid and economic growth in vietnam from 1993 to 2012.
Causal relationships between energy consumption, foreign. Some features of this site may not work without it. Pdf the effect of foreign direct investment on economic. The paper investigates the impact of foreign direct investment fdi on economic growth using detailed sectoral data for fdi inflows to indonesia over the period 19972006. Considering the importance of foreign direct investment fdi inflows for the sustainable economic advancement of a host country, this paper investigates the financial development and fdi nexus, using institutional quality as a moderator.
Guech and moolio 20 12 carried out a research to investigate the relationship between foreign direct investment and economic growth in cambodia. Fdi is an important vehicle of technology transfer from developed countries to developing countries. To our knowledge, no attempts have so far been made to investigate the relationship between fdi and economic growth in. Identifying its determinants is essential in describing the economic performance of the country. Relationships between economic growth, foreign direct. This study focuses on foreign direct investment fdi and its importance to the economy of south africa. Relationships between economic growth, foreign direct investment and trade. Both single equation and simultaneous equation system techniques are applied to examine this relationship. The purpose of this paper is to examine the empirical relationship between fdi and per capita gdp growth in selected mena countries for the years 19751990.
Foreign direct investment f di acquired an important role in the international economy after the second world war. Foreign direct investment theaters a very protuberant role in economic growth and development in developing countries 4. Purpose the main purpose of this study is to study the relationship between economic growth, inflation, international trade and. This paper revisits the fdi and economic growth relationship by examining the role fdi. The results obtained from the study show that there is a negative and statistically insignificant relation between gdp and fdi inflows of pakistan. The objective of this study is to examine the dynamic relationship between fdi, ict, trade, and per capita gross domestic product growth across the south asian association for regional. Does foreign direct investment accelerate economic growth. The objective of this thesis is to investigate the causal relationship between foreign direct investment fdi and economic growth. Malaysia has undergone rapid economic growth since 1960s.
A theoretical framework edmore mahembe, nm odhiambo abstract the relationship between fdi and economic growth has attracted considerable attention over the years. Thus the purpose of this paper is to investigate the relationship between foreign direct investment fdi, domestic investments and economic growth in malaysia. Cambodia, a wartorn economy, also depends on fdi as a driver of economic growth. On the one hand, some researchers argue that, besides supplementing capital, foreign direct investment fdi, as a principal conduit of technology upgradation, knowhow transfer and managing skills exchange, heralds the globalisation of host economies. Financial development and foreign direct investmentthe.
The impact of foreign direct investment and human capital. The role of external debt in the foreign direct investmentgrowth relationship. Li and liu 2005 examine the relationship between, and the impact of, foreign direct investment and economic growth through a crosssection of 84 countries for 19701999. According to lean 2008, the relationship between fdi and economic growth in the malaysian manufacturing sector is independent.