Purpose
The purpose of this paper is to investigate the impact of foreign direct investment (FDI) on economic growth in countries in South America. Additionally, the study explores the causal linkage between FDI and growth in the region.
Design/methodology/approach
The study employs Pedroni’s cointegration test to examine the long-run relationship between FDI and economic growth in South America. Further, the study employs the vector error correction model (VECM) to examine the long-run relationship, and the causal nexus between FDI and economic growth in South America for the period 1980–2015.
Findings
The Pedroni cointegration test establishes a long-run relationship between FDI and economic growth in a panel of ten countries in South America. The long-run estimates of the study find a significant positive impact of FDI on economic growth in the region. The VECM results find a short-run bidirectional causality between FDI and economic growth. The error-term is negative and significant. This indicates the presence of long-run equilibrium relationship among the variables.
Practical implications
Countries in South America should adopt policies that would substantially enlarge FDI inflows to enhance their growth and development.
Originality/value
Numerous studies have examined the impact of FDI on economic growth in the context of Latin America. This study fills a gap in the existing literature by providing an empirical evidence that focuses on South America. This additional perspective could form the basis for the evaluation of the investment policies, and help policymakers to pursue FDI policies that would enhance growth and development in South America.
a b s t r a c tThis paper investigates the production of Nannochloropsis sp. algae at five different sites located in the southwestern region of the United States. Studies of the economic viability of algae production typically calculate the Capital and Operating Expenses of stylized algal production firms with minimal understanding of the linkages between production and input variables that drive the costs being estimated. These results work towards filling this gap by estimating several production functions using real world data. Our dataset includes 10,316 days of algae growth, from which we generate 495 growth period observations. Particularly, the study analyzes the relationship between variation in input factors over a growth period and the resulting algae production measured by ash free dry weight. We carry out several multivariate econometric regression analyses. The variables photosynthetically active radiation (PAR), length of growth periods, and the growth of Nannochloropsis salina result in increased algae production. Algae production at the Texas AgriLife at Texas A&M University in Pecos, Texas, and Flour Bluff, Texas, resulted in higher algae production than the three sites in New Mexico. Increases in the initial algae inoculation levels and average precipitation consistently indicated a negative relationship with algae production in our model. These results should be useful for further studies aiming to connect real world algae production decisions with measures of costs and profitability.
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