FDI inflows, economic growth, and governance quality trilogy in developing countries: A panel VAR analysis

Saidi, Yosra; Ochi, Anis; Maktouf, Samir

doi:10.1111/boer.12364

Cited by 24 publications

(15 citation statements)

References 95 publications

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“…Sabir et al (2019) also observed a positive association between FDI inflows and trade openness in developing countries, as did Kurul and Yalta (2017). Saidi et al (2013) also observed that trade openness is positively related to FDI inflows in 20 developed and developing economies during 1998-2011. However, trade openness is not an FDI determinant for the CIVETS.…”

Section: Discussionmentioning

confidence: 67%

FDI and Institutions in BRIC and CIVETS Countries: An Empirical Investigation

Kechagia

Metaxas

2022

Economies

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In recent years, a number of countries with emerging economies have proceeded to use market-oriented strategies, deregulation and reforms in order to attract more foreign investors and attract foreign direct investment (FDI) inflows. The present paper aims to empirically investigate the role of governance in attracting FDI using panel data and comparing two groups of fast-growing emerging countries, namely BRIC (Brazil, Russia, India, China) and CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa). The study includes a panel data analysis using the latest available secondary data ranging from 2002 to 2019. Empirical models are extended and presented. The findings suggest that FDI inflows in BRICS are attracted by rule of law, regulatory quality, political stability and absence of violence, while CIVETS absorb FDI inflows due to control of corruption, political stability, absence of violence, regulatory quality and government effectiveness. The paper contributes to the existing literature since it is the first attempt to investigate the role of governance in attracting FDI in BRIC and CIVETS economies, taking into consideration other FDI determinants. To our knowledge, it is the first paper to study and compare FDI and institutional determinants in the specific groups of emerging countries.

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Section: Discussionmentioning

confidence: 67%

FDI and Institutions in BRIC and CIVETS Countries: An Empirical Investigation

Kechagia

Metaxas

2022

Economies

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“…The choice of our variables was informed by previous studies such as Hermes and Lensink (2003), Alfaro et al (2004), Blonigen and Wang (2005), Mengistus and Adams (2007), Alleyne and Edwards (2011), Nguyen and To (2017), Raheem and Oyinlola (2013), Saidi et al (2022), and Ochi et al (2022). Economic growth is measured by annual rate of GDP per capita growth.…”

Section: Empirical Methodologymentioning

confidence: 99%

“…They find that the governance quality plays an important role in improving the impact of government expenditure. By applying the panel vector autoregressive (PVAR) model, Saidi et al (2022) examine the triangular relationship between governance quality, FDI, and economic growth for 102 developing countries from 1996 to 2014. They find that inward FDI has a significant impact and can strongly encourage economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

Estimating relationships among foreign direct investment, governance quality, and economic growth in developing countries using the threshold auto‐regressive model

Saidi

Ochi

2023

Regional Science Policy & Practice

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This study examines the triangular relationship between foreign direct investment (FDI), economic growth, and governance quality for 102 developing countries over the period 2000-2018. Compared with the work carried out until now, the novelty of this research lies in using the panel threshold regression (PTR) model to determine the optimal level of governance quality, which, once attained, will make economic growth increase with FDI inflows. We found that the nexus between these three variables is nonlinear.Besides, results show that there is no significant relationship between FDI and economic growth below the threshold level of À1.20 for global governance index (GGI). The results showed that the positive and significant effect of FDI inflows on economic growth begins to manifest once the GGI exceeds this threshold of À1.20. Several policies are proposed and discussed.

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“…Globalization promotes more significant levels of innovation and technology, encouraging entrepreneurship in competitive markets and increasing access to markets, resulting in longer-term growth at constant returns (Krueger & Berg, 2003;Ngepah & Udeagha, 2019;Ngepah, 2014). Foreign direct investment (FDI) has increased due to globalization, and open economics has become more appealing to FDI as their governments have adopted liberal investment policies (Saidi et al, 2013). Foreign direct investment is critical for economic growth and poverty alleviation.…”

Section: Introductionmentioning

confidence: 99%

“…Foreign direct investment is critical for economic growth and poverty alleviation. Foreign investments help in employment generation, technological transfer, and, as a result, the host country's development and economic progress (Berden et al, 2014;Saidi et al, 2013).…”

Section: Introductionmentioning

confidence: 99%

Impact of Governance and Financial Development on Foreign Direct Investment in BRICS Nations

Wasnik,

Sarraf

2023

jeb

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The study tries to understand the impact of Governance and Financial Development on the FDI inflow in the BRICS nations. The study uses the panel regression method to analyze the degree of impact of these indicators on the FDI inflow. The study found that the unit change in Government Effectiveness, Political Stability, and Regulatory Quality will have a positive impact on the FDI inflow in BRICS nations by 1.353, 0.945, and 0.148536 times respectively, while any unit change in the Control of Corruption will have a negative impact on the FDI inflow by 2.820 times. Likewise, for Financial Development, any unit change in the Financial Market Depth and Financial Market Efficiency will positively impact the FDI inflow by 1.634 and 1.624 times, respectively. The study implies that the BRICS nations should focus on strengthening their Government Effectiveness, maintaining Political Stability, improve Regulatory Quality while combating corruption to attract FDI. Similarly, enhancing the Depth and Efficiency of their Financial Markets will significantly strengthen their FDI inflow. The researchers and scholars may pursue the policy implications provided within the study for gauging measures to improve the FDI Inflows in the BRICS nations through Governance and Financial Developments.

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FDI inflows, economic growth, and governance quality trilogy in developing countries: A panel VAR analysis

Cited by 24 publications

References 95 publications

FDI and Institutions in BRIC and CIVETS Countries: An Empirical Investigation

FDI and Institutions in BRIC and CIVETS Countries: An Empirical Investigation

Estimating relationships among foreign direct investment, governance quality, and economic growth in developing countries using the threshold auto‐regressive model

Impact of Governance and Financial Development on Foreign Direct Investment in BRICS Nations

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