FDI, Regulations and Growth

Busse, Matthias; Groizard, José Luis

doi:10.2139/ssrn.895243

Cited by 11 publications

(8 citation statements)

References 49 publications

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“…Authors Busse and Groizard (2006) express the opinion that the countries which economies are heavily regulated by the state, do not suffer, or suffer just a few Foreign Direct Investment benefits for the country. The authors mention that the host state enterprises become more competitive when they accept a foreign competitor and try to maintain a leading position.…”

Section: The Importance Of Foreign Direct Investment Impactmentioning

confidence: 99%

The Evaluation of the Impact of Foreign Direct Investment on Lithuanian Economy Using Lag-Analysis

Kuliaviene

Solnyskiniene

2014

ecoman

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Purposeto determine the particular impact of Foreign Direct Investment (FDI) on the Lithuanian Gross Domestic Product (GDP) through economic activities using lag-analysis, which allows to evaluate the impact on the particular period of time. Methodology. The most important aspect for the host country is how quickly FDI starts to affect country's economy as the impact of FDI occurs after a certain period of time (lag) following the investment actions. There are used the lag determination, statistical clustering and visualization methods.While using these methods there were investigated and were pointed out Lithuanian economic activities which have a significant value in attracting FDI. Results. There was identified the optimum size of lag (certain period of time). Furthermore, there were presented the estimation and the proposals what the government should focus on, on wchi economic activity as one of the most economically perspective. The research showed that the impact of FDI was likely to occur rapidly in energetic sector despite the fact that many other sectors are subsidised by the government. Practical implications-the issue of Foreign Direct Investment impact is one of the most urgent, tas it is believed to enable the country to attract foreign capital and it allow to increase the country's economic growth technological and political development of the country. There had been done many studies analysing the impact of Foreign Direct Investment on the country's economy and particularly on Gross Domestic Product (GDP). Such studies were made by Alfaro (2003), Blonningen and et al. (2006), Johnson (2006), Kornecki (2007), Qaiser and et al. (2011) and by many other scientists. Value/originality. Usually scientists use just correlation-regression analysis to evaluate a certain impact but there hadn't been done any research in Lithuania analysing FDI impact using not only correlation-regression but also lag-analysis method. Due to that, there was created the model showing when the certain impact of FDI started to influence country's GDP.This research not only revealed a new study of economical-statistical approach but also distinguished the most useful economic activity for the creation of the country's economic welfare.

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Section: The Importance Of Foreign Direct Investment Impactmentioning

confidence: 99%

The Evaluation of the Impact of Foreign Direct Investment on Lithuanian Economy Using Lag-Analysis

Kuliaviene

Solnyskiniene

2014

ecoman

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“…The first category finds a positive unconditional effect of FDI on growth - Blomstrom et al (1996); Gao (2001) and Lensink and Morrissey (2006). The second finds an ambiguous role for FDI alone on economic growth and find an important role for various conditioning factors that promote the beneficial effects of FDI -Borensztein et al (1998), Campos and Kinoshita (2002), OECD (2002), Alfaro et al (2004), Busse andGroizard (2008), Agrawal (2000). The problem with this class of studies is that they do not reach any consensus as to the most important conditioning, or facilitating, factors.…”

Section: Introductionmentioning

confidence: 99%

Testing for causality between FDI and economic growth using heterogeneous panel data

Chanegriha

Stewart

Tsoukis

2020

The Journal of International Trade & Economic Development

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The causal relationship between FDI inflows and growth is of great policy interest, yet the state of concrete knowledge on the issue is rather poor. Our contribution is to investigate the causal relationship between the ratio of FDI to GDP (FDIG) and economic growth (GDPG) using a battery of cutting-edge methods and an extensive data set. We employ the heterogeneous-panel tests of the Granger non-causality hypothesis based on the works of Hurlin (2004a), Fisher (1932, 1948) and Hanck (2013). Our panel data set is compiled from 136 developed and developing countries over the 1970-2006 period. According to the Hurlin and Fisher tests, FDIG unambiguously Granger-causes GDPG for at least one country. However, the results from these tests are ambiguous regarding whether GDPG Granger-causes FDIG for at least one country. Using a test based upon Hanck (2013), both with and without one structural break in the vector autoregression, we are able to determine whether and for which countries there is Granger-causality. This test suggests that at most there are six countries (Estonia, Guyana, Poland, Switzerland, Tajikistan and Yemen) where FDIG Granger-causes GDPG and at most four countries (Dominican Republic, Gabon, Madagascar and Poland) where GDPG Grangercauses FDIG.

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“…At the regional level, FDI inflows help deepen group commitment toward established directives in a partnership, as investors are likely to allow their resources in a more united and stable economies than in a single economy (te Velde and Bezemer, 2006). Busse and Groizard (2006) outlined some pre-requisites of an effective FDI in an economy. The foremost was infrastructure and institutional quality.…”

Section: Introductionmentioning

confidence: 99%

“…De Gregorio and Guidotti (1995) in a country-based study highlighted the issue of human capital development. Similarly, Kamara (2013) emphasized human capital development and institutional quality as mentioned by Busse and Groizard (2006). Effective human capital optimizes output performance.…”

Section: Introductionmentioning

confidence: 99%

Africa-China investment and growth link

Koomson-Abekah

Nwaba²

2018

JCEFTS

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Purpose This paper aims to investigate China–Africa Investment link, using over two decades of FDI’s data. During the specified periods, African economic growth path has been predominantly upward trending, despite multiple external threats. This impressive growth was partly because of the growth of FDI stock across the region. This study explores the various sources of FDI to Africa, mainly China’s FDI’s and how they influence African macroeconomic indicators, i.e. unemployment, export and import activities. Design/methodology/approach Pesaran autoregressive distributive lag (ARDL) is used as a framework to test the short-run and long-run relationship of indicators. Granger causality test checked the causality between growth and macroeconomic indicators. Findings The link between China’s FDI and African economic growth reported a negative/declining effect in both short and long run. In the long run, the effect of world FDI on growth was significant but not the in the short run. However, US FDI to Africa, China Export and Import from Africa reported an insignificant effect on growth. There was no evidence of Okun’s law, as a decrease in Africa unemployment does not increase growth. Overall, China’s FDI’s inflows to Africa are allocated to capital-intensive activities which has less labor employability. The Granger causality test reported a uni-directional link between growth and all series, except for human capital which experienced no link at all in all directions. Despite the issue of socio-infrastructure militating against growth in the region, African economy is likely to perform better, if more FDI’s are channeled into labor-intensive activities, because it has a reductive effect on unemployment. Research limitations/implications The research considered point annual FDI data but not accumulated stock and is a macro-based study, i.e. regional economy. Practical implications This paper bridged the literature gap in African investment performance by providing an empirical justification in understanding the inflow of FDI, especially China. This is a useful guard in policy design and implementations in the attraction of the right type of investment, so as to reduce unemployment and promote growth. Originality/value The authors confirm that this study has not been published elsewhere and is not under consideration in whole or in part by another journal.

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FDI, Regulations and Growth

Cited by 11 publications

References 49 publications

The Evaluation of the Impact of Foreign Direct Investment on Lithuanian Economy Using Lag-Analysis

The Evaluation of the Impact of Foreign Direct Investment on Lithuanian Economy Using Lag-Analysis

Testing for causality between FDI and economic growth using heterogeneous panel data

Africa-China investment and growth link

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