Causal Nexus Between FDI Inflows and Its Determinants in SAARC Countries

Kumar, Sushil; Sharma, Akhilesh

doi:10.1177/1391561420940838

Cited by 8 publications

(5 citation statements)

References 55 publications

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“…The study also reveals that inflation and trade openness do not impact FDI inflows for both countries. In another study, Rai and Sharma (2020) confirmed the causal associations of FDI inflows with economic size, trade flexibility and political condition in the SAARC zone. The study argues that expanding markets, trade liberalisation policies and political stability are decisive factors in attracting FDI to the region.…”

Section: Literature Review 31 Determinants Of Fdimentioning

confidence: 60%

Do credit risks deter FDI? Empirical evidence from the SAARC countries

Alam,

Tahir,

Omar Ali

2023

JEFAS

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PurposeThis paper makes a novel attempt to estimate the potential impact of credit risk on foreign direct investment (FDI hereafter), thereby focusing on a completely unexplored area in the existing empirical literature.Design/methodology/approachTo provide a comprehensive understanding of the relationship between credit risk and FDI inflows, the study incorporates all the eight-member economies of the South Asian Association of Regional Cooperation (SAARC hereafter) and analyzes a panel data set, over the period 2011 to 2019, extracted from the World Development Indicators, using the suitable econometric techniques for the efficient estimations of the specified models.FindingsThe results indicate a negative and statistically significant relationship between the credit risk of the banking sectors and FDI inflows. Similarly, market size and inflation rate appear to be the two other main factors behind the increasing FDI inflows in the SAARC member economies. Interestingly, the size of the market became irrelevant in attracting FDI inflows when the Indian economy is excluded from the sample due to its higher economic weight. On the other hand, FDI inflows are not dependent on the level of trade openness, with most of the specifications showing either an insignificant or negative coefficient of the variable.Practical implicationsThe obtained results are unique and robust to alternative methodologies, and hence, the SAARC economies could consider them as the critical inputs in formulating the appropriate policies on FDI inflows.Originality/valueThe findings are unique and original. The authors have established a relationship between credit risk and FDI for the first time in the SAARC context.

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Section: Literature Review 31 Determinants Of Fdimentioning

confidence: 60%

Do credit risks deter FDI? Empirical evidence from the SAARC countries

Alam,

Tahir,

Omar Ali

2023

JEFAS

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“…However, the study also finds that none of the tax incentives were effective in increasing gross fixed capital formation. Furthermore, Rai and Sharma (2020) examine the determinants of FDI inflows for six SAARC countries (i.e., Bangladesh, Bhutan, India, Pakistan, Nepal and Sri Lanka) using panel data. They find that CIT is one of the significant determinants of FDI inflows and the coefficient is significant and negative.…”

Section: Cit and Investmentmentioning

confidence: 99%

Macroeconomic Implications of Changes in Corporate Tax Rates: A Review

Mukherjee¹,

Badola²

2022

Australian Economic Review

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Many countries have initiated structural reforms in corporate income tax (CIT) to attract investment and promote growth. There has been a continuous decline in CIT rates worldwide. It is expected that cuts in CIT rates may increase after‐tax profits and encourage investment. A change in the CIT rate may also be shifted backward (by changing salaries and wages) and/or forward (by changing product prices). These are theoretical possibilities and may not have support from empirical evidence. In this paper we review empirical studies to assess the impact of CIT rate changes on the economy.

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“…Over the last decade, China has become the largest recipient of FDI whilst simultaneously increasing its outward FDI dramatically. Rai and Sharma (2020) found that there exists a long-run, short-run and joint causal relationship between infrastructure development, market size, the openness of the economy, political stability and corporate tax and FDI inflows. Among these variables, the corporate tax is the most important one because it shows bidirectional causality with FDI inflows in the long run as well as short-run along with joint strong causality (Rai, Sharma 2020).…”

Section: Globalisation Frontiers and Enablersmentioning

confidence: 99%

“…Rai and Sharma (2020) found that there exists a long-run, short-run and joint causal relationship between infrastructure development, market size, the openness of the economy, political stability and corporate tax and FDI inflows. Among these variables, the corporate tax is the most important one because it shows bidirectional causality with FDI inflows in the long run as well as short-run along with joint strong causality (Rai, Sharma 2020). Although FDI is known to be the most stable type of international capital flow, it may be particularly susceptible to heightened uncertainty because of its high fixed costs (Choi, Furceri, Yoon 2020).…”

Section: Globalisation Frontiers and Enablersmentioning

confidence: 99%

See 1 more Smart Citation

Globalisation Paradox and Economic Competitiveness of Emerging Economies

Igwe,

Rahman

2022

Glocalism

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The opening-up of BRICS economies (Brazil, Russia, India, China and South Africa) has been regarded as one of the benefits of globalisation. This paper explored the globalisation conundrum and the relationships between internationalisation, economic competitiveness and growth of emerging economies. It examines if there are economic gains and if they are widely shared by revisiting Rodrik’s globalisation paradox and Adam Smith’s propositions on the wealth of the nations and highlighting the difference between economic competitiveness and comparative advantage. This review covered the period between 2006 and 2021 to gain a better understanding of the globalisation paradox. The review suggests that the efficiency gains from trade liberalisation are not equally shared by every country leading to “unbalanced prosperity”. Although the rise of China and India as global superpowers was due to globalisation, many Least Developed Countries (LDCs) are poorer or further behind economically (referred to in this article as “globalised but economically-forsaken”).

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Causal Nexus Between FDI Inflows and Its Determinants in SAARC Countries

Cited by 8 publications

References 55 publications

Do credit risks deter FDI? Empirical evidence from the SAARC countries

Do credit risks deter FDI? Empirical evidence from the SAARC countries

Macroeconomic Implications of Changes in Corporate Tax Rates: A Review

Globalisation Paradox and Economic Competitiveness of Emerging Economies

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