FDI and economic growth: New evidence on the role of financial markets

Azman-Saini, W.N.W.; Law, Siong Hook; Ahmad, Abd Halim

doi:10.1016/j.econlet.2010.01.027

Cited by 250 publications

(155 citation statements)

References 11 publications

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“…The achievement of these high growth rates can be attributed to several factors, among which FDI is undoubtedly significant. 4 Therefore, from the above discussion, we test the hypothesis that corruption serves as an important channel through which FDI affects economic growth. To investigate this hypothesis, we use annual data of 132 countries over the period from 1995 through 2008 for estimation.…”

Section: Introductionmentioning

confidence: 99%

How Does Corruption Influence the Effect of Foreign Direct Investment on Economic Growth?

Okada

Samreth

2014

Global Economic Review

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We investigate the effect of Foreign Direct Investment (FDI) on economic growth by employing the data of 132 countries for the period from 1995 to 2008, considering the role of corruption in each country as an absorptive factor. The estimation results indicate that, although FDI alone does not promote economic growth, it has a significant effect on economic growth if the interaction term between FDI and corruption is considered. The threshold level of corruption separating the negative and positive effects of FDI on economic growth is approximately in the 10th percentile from the least corrupt countries. The existence of a corruption threshold implies a counter-intuitive proposition: that FDI inhibits economic growth in countries where corruption is below a corruption threshold, and promotes economic growth in countries where corruption is above the threshold. Our results are robust even if we use different corruption indices and conduct the instrumental variable estimation to address endogeneity problems.

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Section: Introductionmentioning

confidence: 99%

How Does Corruption Influence the Effect of Foreign Direct Investment on Economic Growth?

Okada

Samreth

2014

Global Economic Review

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“…Countries with well-developed financial markets gain more from FDI since their domestic firms and workers can access financial resources to retool technologies and practices (Alfaro et al 2004;Azman-Saini, Law and Ahmad 2010;Edison et al 2002).  Sectoral composition of FDI.…”

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confidence: 99%

Weakness in Investment Growth: Causes, Implications and Policy Responses

Kose¹,

Ohnsorge²,

Ye³

et al. 2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: Investment growth in emerging market and developing economies has slowed sharply since 2010. This paper presents a comprehensive analysis of the causes and implications of this slowdown and presents a menu of policy responses to improve investment growth. It reports four main results. First, the slowdown has been broad-based and most pronounced in the largest emerging markets and in commodity exporters. Second, it reflects a range of obstacles: weak activity, negative terms-of-trade shocks, declining foreign direct investment inflows, elevated private debt burdens, heightened political risk, and adverse spillovers from major economies. Third, by slowing capital accumulation and technological progress embedded in investment, weak post-crisis investment growth has contributed to sluggish growth of potential output in recent years. Finally, although specific policy priorities depend on country circumstances, policymakers can boost investment both directly, through public investment, and indirectly, by encouraging private investment, including foreign direct investment, and by undertaking measures to improve overall growth prospects and the business climate. JEL Classification Numbers: E22, F2, F6, O1, O4 Terms of use: Documents in

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“…Previous studies provide evidence on the relationship between financial markets and economic growth (Levine & Zervos, 1998;Arestis, Demetriades, & Luintel, 2001;Enisan & Olufisayo, 2009;Azman-Saini et al, 2010;Choong et al, 2010;Thumrongvit et al, 2013;Ngare et al, 2014;Bayar, Kaya, & Yildirim, 2014). They show that a country's economic activities are significantly influenced by the development of the banking sector, the bond market and the stock market.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Even though there are studies that show the negative effects of capital market on economic growth (Calvo, 1998;Reisen & Sato, 2001), many studies provide empirical evidence on its contribution towards economic growth (Levine & Zervos, 1998;Enisan & Olufisayo, 2009;Azman-Saini, Law, & Ahmad, 2010;Choong, Baharumshah, Yusop, & Habibullah, 2010;Thumrongvit, Kim, & Pyun, 2013;Ngare, Nyamongo, & Misati, 2014).…”

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confidence: 99%

Malaysian Stock Market: A Spur to the Country’s Economic Growth

Nordin¹,

Nordin²,

Shahimi³

2016

CUBR

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This study empirically investigates the impact of stock market on Malaysian economic growth using a vector autoregressive (VAR) estimation technique and impulse response function (IRF) over the period of 1988 through 2012. The study is motivated by empirical findings that a well-functioning stock market plays an important role in enhancing economic growth in the developed countries. We find that Malaysian stock market exhibits a positive impact on economic growth. However, we find that the positive impact lasts only for a short period. Specifically, the effect only appears in the first year after the change in market size occurs. In the second year, the effect then starts to alleviate and completely diminishes after several years. The findings provide clear implications that the positive impact of stock market size changes should be fully utilized immediately once it is realized because the impact will not last long.

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FDI and economic growth: New evidence on the role of financial markets

Abstract: This study uses a threshold regression model and finds new evidence that the positive impact of FDI on growth "kicks in" only after financial market development exceeds a threshold level. Until then, the benefit of FDI is non-existent. JEL ClassificationsF23; F36; F43; O16

Cited by 250 publications

References 11 publications

How Does Corruption Influence the Effect of Foreign Direct Investment on Economic Growth?

How Does Corruption Influence the Effect of Foreign Direct Investment on Economic Growth?

Weakness in Investment Growth: Causes, Implications and Policy Responses

Malaysian Stock Market: A Spur to the Country’s Economic Growth

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