Purpose -The purpose of this paper is to examine the relationship between economic growth, foreign direct investment (FDI) and corruption. Design/methodology/approach -Data for 42 developing countries and 28 developed countries is analyzed using panel dynamic ordinary least squares. Findings -FDI has a significant influence on economic growth in both the short run and the long run for developing and developed countries. In the cases of the developing economies, lower levels of corruption enhance the impact that FDI has on economic growth. Originality/value -The study links corruption to the impact of FDI on economic growth.
Remittances have been rising fairly rapidly around the world and are the fastest growing source of foreign exchange earnings for developing countries. The empirical literature suggests that remittances can have both positive and negative influences on the growth and development of receiving states. However, the literature has been largely silent on the potential effects that these flows can have on economic volatility in the receiving country. This paper evaluates the impact of remittance flows on economic volatility in a panel of 95 countries over the period 1970 to 2005. The study reports that remittances can play a key role in mitigating the effect of adverse output shocks but exert no significant influence on consumption and investment volatility. Moreover, important differential impacts exist across the various county groupings.JEL Classification: F240; E320; P500
PurposeInvestment in human development is considered a means of improving the quality of life and sustaining economic growth in the Caribbean. The purpose of this paper is to assess the efficacy of public spending on health care and education by evaluating the life expectancy and school enrolment rates of these countries.Design/methodology/approachUsing a data set containing 19 Caribbean countries over the period 1995 to 2007 for health care and 1980 to 2009 for education, a Panel Ordinary Least Squares model was employed.FindingsThe results revealed that health expenditure has a significant positive effect on health status, while spending on education has no appreciable influence on either primary or secondary school enrolment.Originality/valueUnlike previous Caribbean research, the paper explores a variable for quality in the education system, that is, the pupil‐teacher ratio. It also seeks to update the existing Caribbean literature by employing data from 1980 to 2009.
PurposeThe purpose of this paper is to investigate the potential link between remittances and economic volatility in small island developing states.Design/methodology/approachThe paper estimates a panel data model using a database containing 20 small island developing states (SIDS) observed over annual intervals between 1986 and 2005.FindingsThe results suggest that, in general, remittance flows have a stabilising influence on output and investment volatility. However, given the importance of these flows to SIDS, the volatility of remittances also has a significant and positive impact on both investment and consumption volatility.Practical implicationsThe policy implications of the study's findings is that SIDS (similar to how oil‐producing nations take oil price fluctuations into account when considering policy changes) may have to monitor and forecast future remittance flows and take these projections into account when making changes to either their monetary or fiscal policy stance.Originality/valueWorkers' remittances have grown dramatically worldwide, particularly in SIDS, where they constitute one of the main sources of foreign exchange. Given the importance of these flows to economic growth and development in these countries, this study examines the potential link between remittances and economic volatility.
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