Foreign direct investment and output growth volatility: A worldwide analysis

Ćorić, Bruno; Pugh, Geoff

doi:10.1016/j.iref.2012.07.011

Cited by 25 publications

(11 citation statements)

References 60 publications

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“…In addition, our estimation results reveal that the volatility of the growth rate tends to drop between 0.874 per cent to 4.219 per cent for every 1 per cent increase in financial development (i.e., lnFD t , lnM2 t , lnM3 t , lnPRI t , and lnBC t ). These findings are corroborated with previous studies such as Sahoo et al (2019), Moradbeigi and Law (2016), Ćorić and Pugh (2013), Dabla-Norris and Srivisal 2013, Darrat et al (2005), Denizer et al (2002), Taylor (1994Taylor ( , 1996, Levine (1997), and Bencivenga and Smith (1992). Next, we extend our study to investigate the moderating effect of financial development on the impact of inflation volatility, trade openness and FDI on growth volatility in Malaysia.…”

Section: Methodology and Resultssupporting

confidence: 91%

“…Besides, a battery of empirical studies (Blanchard & Simon, 2001;Ćorić & Pugh, 2013;Fuhrer, 1997;Judson & Orphanides, 1996;Moradbeigi & Law, 2016;Taylor, 1996) have analysed the nexus between inflation-output volatility. They mostly found a trade-off relationship between the volatility of inflation and output growth, probably due to the intervention of inflation-targeting policy (Fuhrer, 1997;Taylor, 1996Taylor, , 1994.…”

Section: Methodology and Resultsmentioning

confidence: 99%

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Does Financial Development Moderate the Effects on Growth Volatility? The Experience of Malaysia

Tang

Abosedra

2020

Margin: The Journal of Applied Economic Research

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This article examines whether financial development can moderate the effects of growth volatility in the Malaysian economy. Using annual data from 1972 to 2018, we noted the existence of a strong link between growth volatility and financial development over the long-run. The findings also indicate that financial development alleviates the incidence of growth volatility over the long-run. Our basic estimated model shows further that trade openness has a significant positive impact on growth volatility, while inflation volatility, inward FDI and financial development have a significant negative impact on growth volatility in Malaysia. This model is extended to count the moderating effects of financial development on the impact of inflation volatility, trade openness and FDI on growth volatility in Malaysia. The results show that financial development not only has a direct impact on growth volatility but it also moderates the impacts of inflation volatility, trade openness and FDI on growth volatility. Therefore, our results extend established findings on the finance-growth volatility nexus for the Malaysian economy. More importantly, it shows additional possible benefits from financial development for growth stability. Furthermore, we note that ignoring such benefits may have contributed to the conflicting empirical results reported in the finance-growth volatility literature. We offer some specific policy implications based on such empirical results that are beneficial to the Malaysian economy and other countries in the region. JEL Classification: C32, E32, O16

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Section: Methodology and Resultssupporting

confidence: 91%

Section: Methodology and Resultsmentioning

confidence: 99%

Does Financial Development Moderate the Effects on Growth Volatility? The Experience of Malaysia

Tang

Abosedra

2020

Margin: The Journal of Applied Economic Research

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“…Some researchers highlight the importance of foreign capital employed for the economy's growth, both directly through an increase in productivity and exports, and indirectly through easier technological transfer (Teixeira and Shu, 2012). Ćorić and Pugh (2013) found that foreign direct investments in the pre-crisis period negatively influenced GDP growth volatility, thus contributing to the reduction of risks.…”

Section: Research Framework and Methodologymentioning

confidence: 99%

Did relational capital matter during the financial crisis?

Kuminova

Bykova

2014

IJLIC

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This paper aims to contribute to the body of empirical studies that address the importance of investments in companies' relationships and the way in which they influence value creation in the global economic crisis. We employ linear panel analysis using the Hausman-Taylor model to analyse panel data for companies from the five largest European countries in the period 2004-2011. Different types of exogenous and endogenous links which a company could have in different stages of the crisis are investigated. The findings suggest that there is a statistically significant and positive link between relational capital and a firm's value. Moreover, we identify several differences in the significance of the inputs during different crisis periods. The study provides both theoretical and practical insights into investments in intangibles for framing strategy decisions with a particular focus on the role of relational capital. This could provide scholars and practitioners with a working basis for understanding connections and the implications of strategizing in the context of a company's networks.

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“…Levchenko, Ranciere, and Thoenig (2009), however, find evidence that financial liberalization increases output volatility. Recently, Ćorić and Pugh (2013) Researchers typically measure financial development by the ratio of claims on the private sector by deposit money banks and other financial institutions to GDP (e.g., Levine, Loayza, andAghion, Howitt, andMayor-Foulkes, 2005). Given their measure of bank (financial) development, Cetorelli and Gambera (2001) investigate whether the market structure of the banking system exerts any influence on economic growth.…”

Section: Introductionmentioning

confidence: 99%

Banking Market Structure, Liquidity Needs, and Industrial Growth Volatility

2013

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While the existing literature acknowledges the effect of banking structure on industrial growth as well as the effect of financial development on industrial growth and its volatility, we examine whether banking structure, given financial development, exerts any nontrivial effect on industrial growth volatility. We show that bank concentration magnifies industrial growth volatility, but reduces the volatility in sectors with higher external liquidity needs. The reduction in industrial growth volatility mostly reflects the smoothing in the volatility of real value added per firm growth. A variety of sensitivity checks show that our findings remain for different model specifications, banking market structure measures, liquidity need indicators, and omitted variables.

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Foreign direct investment and output growth volatility: A worldwide analysis

Cited by 25 publications

References 60 publications

Does Financial Development Moderate the Effects on Growth Volatility? The Experience of Malaysia

Does Financial Development Moderate the Effects on Growth Volatility? The Experience of Malaysia

Did relational capital matter during the financial crisis?

Banking Market Structure, Liquidity Needs, and Industrial Growth Volatility

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