Effect of Foreign Direct Investment on China Economic Growth: A Granger Causality Approach.

Adi, Agya Atabani

doi:10.9790/5933-0245663

Cited by 5 publications

(2 citation statements)

References 10 publications

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“…It is also argued that the proofing evidence is caused by differences in technological absorption between countries of origin and destination countries so that it will outperform the economic growth of the go-to country (Stockhammar & Österholm, 2016). Another notable gap in the literature is how FDI and economic growth, which are assumed to have an endogenous relation, do not have a causality (Agya & Wunuji, 2014).…”

Section: Literature Reviewmentioning

confidence: 99%

Role of Socioeconomic Uncertainty on Foreign Direct Investment (FDI) Inflows and Economic Growth in ASEAN

Marasanti,

Verico

2023

J. ASEAN Studies

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The interconnectedness begins with active trade and foreign investment flowing to the host country, making the economies in the world integrated into one another. Unfortunately, the rise of interconnectedness has sky-rocketed uncertainty. Economists then build the considered socioeconomic index, namely the World Uncertainty Index (WUI). This research aims to determine whether such an index can affect Foreign Direct Investment (FDI) inwards and economic growth, especially in ASEAN. We use yearly data of FDI inflows, economic growth, and WUI as a proxy for the global level of domestic uncertainty, inflation, and real effective exchange rate from 2015 to 2019 for each ASEAN member state. We estimate a System Generalized Method of Moments (Sys-GMM) to see the dynamic relationship and the short- and long-run effect of the socioeconomic uncertainty proxies with respect to FDI inflows and economic growth. The results show that the uncertainty index with respect to FDI inflows and growth has been negative and significant. Meanwhile, only FDI inflows sensitively respond to socioeconomic uncertainty in the long run, despite the growth for ASEAN member state.

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Section: Literature Reviewmentioning

confidence: 99%

Role of Socioeconomic Uncertainty on Foreign Direct Investment (FDI) Inflows and Economic Growth in ASEAN

Marasanti,

Verico

2023

J. ASEAN Studies

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“…No significant relationship was found in the short run although the study detected a significant positive relationship in the long run for the coefficient of FDI. Agya (2014) explored the effect of FDI on China's economic growth, using the data for 1995-2010 and the Granger causality test. It was found that FDI does not in any way cause economic growth in the primary industry.…”

Section: R-economycommentioning

confidence: 99%

The relationship between foreign direct investment and GDP in Cameroon (2000–2020)

Numbu

Belyaeva

Zone³

2021

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Relevance. In the last 20 years Cameroon has faced a series of crises. The 2035 governmental programme of recovery aims to transform the country into an emerging economy nation. The effects of the COVID-19 pandemic have slowed down economic growth in Cameroon and the country is hoping to attract foreign direct investment (FDI) and thus benefit from the new business opportunities to revitalize its economy. This context makes the research on the relationship between FDI and GDP particularly relevant. Research objective. This paper is designed to assess the relationship between GDP and FDI in Cameroon in 2000-2020. In addition, we aim to assess the scope of internationalization through FDI as a possible catalyst for economic recovery. Data and methods. The paper uses correlation and regression analysis to show the relationship between FDI and GDP. Results. The results show that FDI can increase Cameroon’s GDP and may be used as an empirical basis for policy- and strategy-making in Cameroon. Conclusions. We found a strong correlation between FDI and GDP in Cameroon for a 21-year period. This result is supported by the double effect of FDI on the national economy: FDI directly affects the investment component of GDP, but it also influences economic growth indirectly. The activities of foreign firms in Cameroon can support trade and even balance of payment, which indirectly influences the export and import component of GDP. Foreign subsidiaries both solely owned or joint ventures pay indirect taxes to the government and thus influence government spending.

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The role of foreign direct investment, financial development, democracy and political (in)stability on economic growth in West Africa

Yusuf

Shittu

Akanbi

et al. 2020

ITPD

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PurposeIn this research, we examine the role of financial development, FDI, democracy and political instability on economic growth in West Africa.Design/methodology/approachThe study uses the dynamic fixed effects technique on the secondary data obtained from 1996 to 2016.FindingsOur empirical findings suggest that even though no significant relationship is established in the short run, the long-run coefficient of FDI is found to be significant and positive; a 1% increase in FDI inflow into the West African sub-region results in a 0.26% increase in economic growth. The coefficient of democracy is significant neither in the short run nor in the long run, but political instability is found to significantly and negatively impact the growth of the countries. Finally, the estimate of financial development–growth nexus follows the supply-leading hypothesis.Research limitations/implicationsThis research affirms the proposition that FDI is a relevant means of technology and knowledge transfers, thus resulting in increasing returns to production as a result of productive spillovers, which drives the growth of the economy. Consequently, an efficient institution – where the rule of law, political stability and economic freedom are top priorities – is a key to accelerate the growth of the West African economy. Similarly, we confirm the validity of the supply-leading hypothesis in West Africa. As such, by deepening the financial system, the growth of the subregion is propelled because an efficient financial system is a basis for sustainable development.Practical implicationThe applicable policies are those that promote growth through FDI, financial development, democracy and political instability. The governments of West African countries are enjoined to promote policies that attract FDI into the subregion and promote financial sector credits so that economic performances may be enhanced. In addition, the governments of West African subregion should fully entrench democratic practices and enhance a stable and sustainable political environment. This will not only restore investor confidence but will also facilitate the inflow of FDI into the West African economy.Originality/valueOur study is the first to jointly examine these important growth determinants, especially in the context of West Africa. This becomes necessary in order to open the eyes of policy makers to the need for entrenched full democracy and to proffer sustainable cures to the frequent unrests in the subregion. The use of Pesaran (2007) technique of unit root is also a deviation from several existing studies. One advantage of this technique over others is that being a second-generation test, it tests variable unit root in the presence of cross-sectional dependence.

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Effect of Foreign Direct Investment on China Economic Growth: A Granger Causality Approach.

Abstract: The paper focuses on the causal effect of Foreign Direct Investment (FDI) on Economic growth of

Cited by 5 publications

References 10 publications

Role of Socioeconomic Uncertainty on Foreign Direct Investment (FDI) Inflows and Economic Growth in ASEAN

Role of Socioeconomic Uncertainty on Foreign Direct Investment (FDI) Inflows and Economic Growth in ASEAN

The relationship between foreign direct investment and GDP in Cameroon (2000–2020)

The role of foreign direct investment, financial development, democracy and political (in)stability on economic growth in West Africa

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