Foreign capital inflows, economic growth and stock market capitalization in Asian countries: an ARDL bound testing approach

This study investigates the effects of foreign capital inflows and economic growth on stock market capitalization in 18 Asian countries by using the panel data from the period of 2000–2010. The ARDL bound testing cointegration approach confirms the valid long run relationship between the considered variables. Results indicate that foreign direct investment has significant negative and economic growth has significant positive relationship with the stock market capitalization, whereas, the results of workers’ remittances is found insignificant in long run. The error correction model confirms the significant positive relationship of economic growth and workers’ remittances while, FDI has negative and significant impact on stock market capitalization in short run. Results of causality test based on Toda and Yamamoto (J Econom 66: 225–250, 1995) show the bidirectional causal relationship of foreign direct investment and economic growth with stock market capitalization. However, no causal relationship is found in between workers’ remittances and stock market capitalization. It is suggested that investor should not idealize the inflow of workers’ remittances to invest in Asian stock markets in long run. Simultaneously, size of the economy is a better leading indicator for Asian stock markets. On the other hand, inflows of FDI may mislead the investor to invest. Investor should keep on eye whether FDI come in the competition of domestic market or not? If this happens so investor should not invest in the stock market of host country.     

Foreign capital inflows and economic growth of Pakistan

This study investigates the relationship of foreign capital inflows, namely foreign direct investment, workers’ remittances, and external debt with economic growth of Pakistan by employing time series data from 1976 to 2015. Cointegration results indicate that foreign capital inflows and economic growth have a significant relationship with economic growth in the long run. Ordinary least square results indicate foreign direct investment has a significant and negative effect on economic growth, whereas a significant positive effect of remittances and external debts on economic growth is found. Rolling windows analysis highlights the yearly effect of three different models. Two different sensitivity analyses confirmed that initial results are robust. The final section concludes the study and provides some policy implications.     

Foreign direct investment and economic growth in Sub-Saharan Africa: A nonlinear analysis

Using the threshold regression model, we examine the effects of Foreign Direct Investment (FDI), and the mediating role of FDI absorptive capacity, on economic growth in Sub-Saharan Africa. We find that the threshold level of FDI inflows per person is approximately US$ 44.67 per annum. For FDI to have an appreciable impact on economic growth, countries must have minimum capacity to absorb the growth-enhancing benefits of FDI. For instance, the technology gap between the hosted foreign enterprises and domestic enterprises should be no less than 0.6904. Thus, achieving the FDI threshold level is a necessary, but not sufficient, condition for economic growth. Some countries use tax incentives to improve FDI inflows. We argue that such incentives may be counterproductive at low levels of FDI inflows: FDI coefficient estimates below the lowest threshold level are negative, implying that the higher costs of such incentives exceed the potential benefits availed by FDI’s direct contribution to economic output and spillovers.     

Multilateral Trade Liberalisation and Foreign Direct Investment Inflows

This paper investigates two questions: how does multilateral trade liberalisation affect inward foreign direct investment, and does this impact (if any) depend on the domestic trade policy? The analysis uses a panel data set comprising 171 countries spanning the period 1995–2012. Results indicate that multilateral trade policy liberalisation is conducive to higher FDI inflows in host countries. Furthermore, our evidence suggests that domestic trade policy almost always positively drives inward FDI in a context of multilateral trade policy liberalisation. Countries which initially have the most restrictive trade policy regimes appear to be the greatest beneficiaries of FDI inflows when they liberalise their trade policy in the context of multilateral trade liberalisation.     

The relationship between trade,FDI and economic growth in Tunisia: An application of the autoregressive distributed lag model

The relationship between foreign direct investment (FDI), trade openness and economic growth in host countries remains one of the most important issues in the economic literature and met with renewed interest in recent years mainly for countries suffering from unemployment problems and lack of technological progress. This paper examines this issue for Tunisia by applying the bounds testing (ARDL) approach to cointegration for the period from 1970 to 2008. The bounds tests suggest that the variables of interest are bound together in the long run when foreign direct investment is the dependent variable. The associated equilibrium correction is also significant, confirming the existence of a long-run relationship. The results also indicate that there is no significant Granger causality from FDI to economic growth, from economic growth to FDI, from trade to economic growth and from economic growth to trade in the short run. Even though there is a widespread belief that FDI can generate positive spillover externalities for the host country, our empirical results fail to confirm this belief for the case of Tunisia. They go against the generally accepted idea considering the positive impact of FDI on economic growth to be automatic. The results found for Tunisia can be generalized and compared to other developing countries which share a common experience in attracting FDI and trade liberalization.     

Foreign capital inflows and poverty linkages in South Asia: Do the forms of capital inflows matter?

The relationship between foreign direct investment and poverty reduction has received modest attention in the empirical literature. However, little is known about the relative significant impact of different forms of capital inflows on poverty reduction. This study attempts to investigate the impact of different forms of capital inflows (foreign direct inflows, portfolio equity and portfolio debt inflows) on poverty reduction in major South Asian economies during the post-reform period. The capital inflows-poverty nexus is explored using panel econometric methods robust to cross-sectional dependence. Our empirical results show that while portfolio equity inflows exert a favorable impact on poverty reduction, foreign direct inflows and debt inflows fail to influence poverty. The panel causality results demonstrate that portfolio equity inflows also support poverty alleviation via stimulating economic growth and trade openness. The findings of our study highlight the importance of considering the differential welfare impacts of different forms of capital inflows while implementing capital account liberalization.     

Efficiency externalities of trade and alternative forms of foreign investment in OECD countries

The literature on the spillover effects of trade and inflows of foreign direct investment (FDI) has concentrated on technological externalities. Little effort has been directed towards identifying their efficiency externalities. This paper measures the efficiency externalities of trade and various forms of foreign investment for a sample of 20 OECD countries between 1982 and 2000 using a stochastic frontier approach. Trade and all foreign investment inflows are found to enhance efficiency, whereas outflows of FDI are found to exacerbate inefficiency. The efficiency externalities from foreign investment are contingent on the absorptive capacity of the host economies. Copyright © 2008 John Wiley & Sons, Ltd.     

我国环境规制对不同来源国FDI的影响

利用对中国直接投资排名前33位国家和地区的面板数据,对环境规制等因素与不同来源国FDI流入的关系进行研究,结果显示,我国环境规制虽然在一定程度上阻碍了来自发展中国家的FDI,但对发达国家的FDI并未产生影响.由于我国FDI大部分来自发达国家,因此我国环境规制对FDI流入的影响是有限的.提高我国的环境规制水平不但不会抑制FDI企业的进入,反而可以提高高新技术企业的竞争优势,发挥这些企业的技术扩散、外溢效应,更好地实现招商引资的战略目的.     

Impact of Islamic banking development and major macroeconomic variables on economic growth for Islamic countries: Evidence from panel smooth transition models

This study examines the nonlinear relationship between Islamic banking development, major macroeconomic variables and economic growth in Islamic countries. Using the panel smooth transition model, the results show a positive nonlinear relationship between Islamic banking development and economic growth. Moreover, the relationship between the macroeconomic variables and economic growth is asymmetric and regime-dependent. Further, by using the dynamic panel quantile model, we show that for many cases the Islamic banking variables lead economic growth across the quantiles. More specifically, foreign direct investment, oil production and inflation have a positive impact on economic growth during the normal financial development state, while government consumption, one-lag economic growth, terms of trade and financial development have a negative impact on economic growth for this state. The human capital index, education and the rule of law have an insignificant impact, regardless of the prevailing regime. The results for the separated oil-importing and oil-exporting economies are generally consistent with the combined sample regarding the Islamic banking development variables. As for the macro variables, they have a positive and significant (insignificant) effect on EG for the oil-importing (oil-exporting) economies for almost all models.     

Assessing the impact of fiscal transparency on FDI inflows

This paper analyzes the role of fiscal transparency as a determinant of foreign direct investment (FDI) attractiveness. It proposes an empirical test based on a panel regression analysis on data from 72 countries in the 2006–2015 time span. The evidence supports the idea that countries characterized by higher levels of budget openness attract more FDI inflows. In more detail, a higher degree of transparency during the phase of budget execution is associated with increases of FDI inflows, even when the sample is restricted to non-OECD countries and low and lower-middle-income countries. The positive effect is robust to several different specifications and is found to be additional to the one of general government transparency. Moreover, we also show that the role played by fiscal transparency in attracting FDI is independent of other close institutional determinants like control of corruption and regulatory quality.     

经济转型下的外商直接投资、国内资本与经济增长——基于中国时间序列数据的计量检验与实证分析

经济转型背景下,中国经济持续增长的一个重要原因是引入外商直接投资。本文对1985年-2010年中国外商直接投资、国内投资与经济增长的总量时间序列数据进行了实证分析。结果表明:FDI与国内资本对我国的经济增长的影响显著,都是GDP的格兰杰原因,与经济增长存在长期均衡关系;但FDI对经济增长的影响小于国内资本,并且FDI与国内资本还存在相互挤入效应。     

Remittances and economic growth in Africa, Asia, and Latin American-Caribbean countries: a panel unit root and panel cointegration analysis

This study estimates the macroeconomic impact of remittances and some control variables such as openness of the economy, capital/labor ratio, and economic freedom on the economic growth of African, Asian, and Latin American-Caribbean countries using newly developed panel unit-root tests, cointegration tests, and Panel Fully Modified OLS (PFMOLS). We use annual panel data from 1985–2007for 64 countries consisting of 29 from Africa, 14 from Asia, and 21 from Latin America and the Caribbean region, respectively. We find that remittances, openness of the economy, and capital labor ratio have positive and significant effect on economic growth for all regions as a group and in each of the three in study. While the economic freedom index also has a positive and significant effect on growth in Africa and Latin America, however, its effect on the economic growth of Asia is mixed.     

Digging in the dirt? Extractive industry FDI and corruption

Does corruption attract or deter foreign investment in the extractive sectors? This article presents an econometric analysis of extractive industry foreign direct investment (FDI) inflows to 81 countries in the period 1996–2009. The results suggest that increased corruption within a country is associated with increased extractive industry FDI, but at a diminishing rate as corruption increases grow larger. For realistic changes in corruption, however, more corruption is associated with more extractive industry investment.     

Sino-Indian Liberalization: The Role of Trade and Foreign Investment

Two major factors account for a country’s growing integration with the global economy: trade and foreign investment; expansion of exports, and foreign direct investment (FDI). Growth of exports became a dominant source of industrial growth during the 1980s in most developing countries (see Helleiner, 1995). Most of these countries including China and India, have replaced the old import-substitution policy by an export promotion strategy. Both domestic and international factors played an important role in the shift of national policies to repay debts. The process of globalization already underway necessitated export orientation for improving technology, management practices, marketing and international competitiveness. This paper aims at exploring the contributions of exports and FDI to growth and economic liberalization in China and lndia. The first section briefly reviews similarities and differences in the two economies. The second section deals with growth, composition and direction of foreign trade. The third section examines the role of FDI, and its sources and composition by sector, industry, and by overseas ethnic Chinese and Indians. Trade and FDI linkages are examined in the fourth section which also contains a brief case study of Guangdong (China). This revised version was published online in July 2006 with corrections to the Cover Date.     

Foreign direct investment and small firm employment in northern Mexico: 1987-1996

This study analyses the impact of foreign direct investment on small business employment along the border in Mexico between 1987 and 1996. During this period, unprecedented levels of foreign direct investment flowed to Mexico, most notably to the northern border region. At the same time, it appears that internal migration of workers from the interior to the border occurred in response to employment generated by this investment. Utilizing 1987 and 1996 data from the Encuesta Nacional de Empleo Urbano, bivariate probit models of employment and small/ large firm employment for the border and interior regions are estimated. The results suggest that the increased employment share captured by large firms in the border may have hindered growth in the small business sector. A better understanding of the impact of FDI flows on small businesses may help policymakers in developing countries as they strive to create broad-based economic growth.     

The impact of foreign trade issues on economic growth in some developing countries including Iran and Turkey

The issue of foreign trade and economic growth have been on the economic agenda for centuries. Foreign trade is a facilitator of goods and services exchange in the global marketplace and is an engine of economic growth in a country. Moreover, economic growth is a means to improve the output, employment opportunities, and welfare, which in turn could make a favorable impact on the positive foreign trade balance. Economic growth is also an essential component of country competitiveness in international markets. Yet, the objective of this study is to analyze the correlation between foreign trade and economic growth in some developing countries, including Iran and Turkey, by using econometrics applications (panel co-integration method and E-views software), also resting on credible national and international publications. Thus, it is estimated in the study that foreign trade has a positive impact on economic growth, resource allocation, energy and green energy consumption, human capital development, and physical capital consumption.     

Growth empirics with institutional measures for transition countries

This paper investigates the importance of institutions as a determinant of growth and foreign direct investment (FDI) in 25 transition countries for 1990–1998. It introduces some novel institutional measures, performs extensive sensitivity tests, and checks for reverse causation. Estimation results suggest that state institutions in particular are quite robustly important for growth and FDI. The relationship between institutions and growth is likely to be a causation, that between institutions and FDI less so. The significance of macroeconomic stabilization and liberalization is also confirmed, but multicollinearity problems make it impossible to properly judge their importance relative to that of institutions.     

The effect of nominal exchange rate volatility on real macroeconomic performance in the CEE countries

This paper analyzes the relation between nominal exchange rate volatility and several macroeconomic variables, namely real output growth, excess credit, foreign direct investment (FDI) and the current account balance, in the Central and Eastern European EU member states. Using panel estimations for the period between 1995 and 2008, we find that lower exchange rate volatility is associated with higher growth, higher stocks of FDI, higher current account deficits, and higher excess credit. At the same time, the recent evidence seems to suggest that following the global financial crisis, “hard peg” countries may have experienced a more severe adjustment process than “floaters”. The results are economically and statistically significant and robust.     

政府债务对经济增长的影响及作用渠道

基于1960～2010年113个国家的面板数据集,运用系统广义矩动态面板方法和稳健性分析,比较发达国家和发展中国家政府债务经济增长效应的差异,并尝试分析政府债务影响经济增长的渠道。研究结果显示,政府债务对经济增长有非线性影响;发达国家政府债务对经济增长、投资以及全要素生产率均无显著影响;发展中国家对政府债务的直接承受力更弱,但在一个宽松的临界点内,政府债务的增加可以提高投资率。     

中国企业对外直接投资发展研究

对外直接投资是为海外的子公司供应生产要素,因此能帮助投资国避开贸易保护主义促进出口贸易的发展。本文首先对对外直接投资与出口贸易的关系进行了实证分析,然后介绍了中国企业对外直接投资现状和存在的问题,并针对存在的问题提出了一些对策和建议。