Effect of foreign direct investment, remittances, and foreign aid on economic growth: Evidence from two emerging South Asian economies

Das, Aurolipsa; Sethi, Narayan

doi:10.1002/pa.2043

Cited by 44 publications

(33 citation statements)

References 33 publications

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“…In summary of empirical review, this study differs from earlier empirical studies, which either examined the relationship between foreign aid and economic growth (Asiedu, 2014;Das and Sethi, 2019;Jena and Sethi, 2019;Sethi et al, 2019) or foreign aid and foreign direct investment (Bhavan et al, 2011;Quazi et al, 2014), which neglected the interactive roles of Human capital in foreign aid -economic nexus as emphasised by the Neoclassical growth theory that provided the underpinning for the study. IJDI 20,2…”

Section: Empirical Literaturementioning

confidence: 95%

Human capital interaction on foreign aid-growth nexus: evidence from South Asia and sub-Saharan Africa

Nwani

2021

IJDI

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Purpose The purpose of this study is to examine the interactive role of human capital development (HCD) in foreign aid-growth relations in South Asia and sub-Saharan Africa countries from 1985–2019. Design/methodology/approach The study used panel data that cut across all countries in South Asia and sub-Saharan Africa collected from The World Bank’s Development Indicators. The data were analysed using Bai and Ng panel unit root idiosyncratic cross-sectional tests and the system generalised method of moments (SGMM). Findings The study found that foreign aid and HCD have negative impacts on economic growth. Fortunately, the interaction of human capital with foreign aid reduces the extent to which foreign aid impedes economic growth. The presumption is that South Asia and sub-Saharan Africa economies had not reaped the potential growth effect of foreign aid inflows due to high illiteracy rates and weak social capacities. The peculiarity of these regions hinders the absorptive capacity to transform positive externality associated with foreign aid into sizeable economic prosperity. Practical implications It is imperative for South Asia and sub-Saharan Africa countries to not depend on foreign aid; instead, the strategic action by policymakers should be to developing sustainable social capacities with HCD as the centre-piece. Originality/value The highpoint of this study is its inter-regional approach and the interplay between human capital and foreign aid using the second generation panel unit root estimator and the SGMM approaches.

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Section: Empirical Literaturementioning

confidence: 95%

Human capital interaction on foreign aid-growth nexus: evidence from South Asia and sub-Saharan Africa

Nwani

2021

IJDI

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“…Their findings from empirical estimations suggest that while foreign aid is negatively associated with FDI as well as growth, FDI positively influences growth. Das and Sethi (2019) analyzed the effect of FDI, remittances and official development assistance on economic growth in India and Sri Lanka. They found that that FDI and remittances have a significant impact on economic growth in India, whereas in Sri Lanka, foreign aid and remittances play an important role in enhancing economic growth.…”

Section: Review Of Literaturementioning

confidence: 99%

Foreign aid and growth nexus: empirical evidence from South Asian countries

Jena

Sethi

2020

SAJBS

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PurposeThe purpose of this paper is to empirically examine the effectiveness of foreign aid in improving economic growth prospects in the South Asian region from 1996 to 2017.Design/methodology/approachA sample of eight South Asian countries for the period 1996–2017 is being considered for this study. This study uses various econometrics tools such as Pedroni and Johansen–Fisher panel cointegration test, panel fully modified ordinary least square and panel dynamic ordinary least square (PDOLS) to ascertain the long-run and short-run dynamics among the variables under consideration.FindingsThe empirical results found that long-run, as well as the short-run relationship, exist among foreign aid, economic growth, investment, financial deepening, price stability and trade openness of the South Asian economies. The authors also found unidirectional causality running from foreign aid to economic growth. Both the long-run relationship as well as short-run causality between foreign aid and economic growth is unequivocally positive.Originality/valueThis study uses a dynamic macroeconomic modeling framework to assess the impact of aid flows on economic growth in South Asian economies. Taking into account the diversity of level of growth experienced by the eight countries in the Asian region, this study uses an appropriate regression technique, i.e. PDOLS whose results are robust. Therefore, the policymakers in these countries are well-advised to implement suitable policy measures to ensure optimum utilization of foreign capital resources garnered by way of receipt of foreign aid and build on for stronger future economic growth.

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“…Adenutsi 2010 They found that inward remittance is affecting export performance negatively during the study period. Das and Sethi (2019) Table 4.…”

Section: Empirical Literaturementioning

confidence: 99%

“…They found that inward remittance is affecting export performance negatively during the study period. Das and Sethi (2019) analyzed the effect of foreign direct investment, remittances, and official development assistance on economic growth in India and Sri Lanka. They found that that foreign direct investment and remittances have a significant impact on economic growth in India, whereas in Sri Lanka, foreign aid and remittances play an important role in enhancing economic growth.…”

Section: Review Of Literaturementioning

confidence: 99%

Does remittance inflow influence human development in south Asian countries? An empirical insight

2020

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Effect of foreign direct investment, remittances, and foreign aid on economic growth: Evidence from two emerging South Asian economies

Cited by 44 publications

References 33 publications

Human capital interaction on foreign aid-growth nexus: evidence from South Asia and sub-Saharan Africa

Human capital interaction on foreign aid-growth nexus: evidence from South Asia and sub-Saharan Africa

Foreign aid and growth nexus: empirical evidence from South Asian countries

Does remittance inflow influence human development in south Asian countries? An empirical insight

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