The impact of foreign capital inflows on economic growth and employment in Egypt

Abouelfarag, Hanan AbdelKhalik; Abed, Mohamed Sayed

doi:10.1108/jeas-12-2018-0138

Cited by 14 publications

(19 citation statements)

References 38 publications

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“…There is a vast amount of literature on the relationship between FDI and economic performance and a large amount of empirical research on European and emerging countries (Rehman, 2016; Sirag et al , 2018; Bhuimali et al , 2019; Pradhan et al , 2019; Onafowora and Owoye, 2019; Abouelfarag and Abed, 2019; Owusu-Nantwi and Erickson, 2019; Hagan and Amoah, 2019; Ali and Mna, 2019; Chandio et al , 2019; Saleem et al , 2020; Munir and Ameer, 2020; Ibhagui, 2020). The authors found that foreign direct investment improves economic growth through existing commercial systems, banking systems and financial markets, the degree of openness of their economies and the levels of human capital in host economies.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…In general, most of the previous studies which have focused on analyzing the association between FDI and macroeconomic factors have found that FDI significantly influences the economic activities in both developed and emerging market economies (Li and Park, 2016; Li et al , 2017; Mowlaei, 2018; Hayat, 2018; Okechukwu et al , 2018; Mishra and Jena, 2019; Owusu-Nantwi and Erickson, 2019; Bhuimali et al , 2019; Pradhan et al , 2019; Onafowora and Owoye, 2019; Abouelfarag and Abed, 2019; Owusu-Nantwi and Erickson, 2019; Hagan and Amoah, 2019; Ali and Mna, 2019; Chandio et al , 2019; Saleem et al , 2020; Munir and Ameer, 2020; Ibhagui, 2020). Over the years, foreign investment has grown significantly in several developing economies and has become a key constituent of the local system.…”

Section: Introductionmentioning

confidence: 99%

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Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Saif‐Alyousfi¹

2020

CFRI

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PurposeThis paper investigates and compares the impact of foreign direct investment (FDI) inflows (flow and stock) on bank off-balance sheet (OBS) activities in aggregate as well as at the level of conventional and Islamic banks in GCC countries. It also tests hypotheses of direct and indirect impacts of FDI flow and FDI stock on OBS activities.Design/methodology/approachThis paper uses both static and dynamic panel generalized methods of moments (GMM) estimation techniques to analyze the data of 70 GCC banks (45 conventional and 25 Islamic banks) over the period 1995–2017.FindingsEmpirical results indicate that FDI flow and FDI stock have a significant negative direct impact on OBS activities of GCC banks. The results lend support for the direct channel hypothesis for the effect of FDI on OBS activities and find no evidence in support of the indirect channel hypothesis. OBS activities from conventional banks appear to be more affected than those from Islamic banks.Practical implicationsThe results of this study are expected to trigger appropriate policy response from the central banks of the respective GCC countries as well as their governments.Originality/valueIt is widely recognized that FDI inflows are of great importance to the economic development of emerging and developing countries. However, their impact on bank OBS activities has so far not been subject to accurate empirical assessment. This paper aims to fill this gap by providing an in-depth quantitative analysis of the impact of FDI flow and FDI stock separately, on bank OBS activities for both conventional and Islamic banks in GCC countries. It distinguishes between direct and indirect channels through which FDI flow and FDI stock may affect OBS activities for banks as a whole and both conventional and Islamic banks separately. It also uses both static and dynamic panel GMM estimation techniques to analyze the data.

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Section: Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Saif‐Alyousfi¹

2020

CFRI

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“…A similar study by Malik (2019) employed the system GMM and found that FDI does not influence domestic labour demand in Indian manufacturing sectors. Using data from Egypt as well as the ARDL model, Abouelfarag and Abed (2019) conclude that the connection between FDI and employment is positive. Similarly, Alfalih and Hadj (2020) focused on Saudi Arabia between 1984 and 2015.…”

Section: Empirical Evidencementioning

confidence: 96%

The New Scramble for Africa’s Oil: Implication for Labour and Employment

Ezenekwe

Nkamnebe

Uzonwanne

et al. 2022

TIS

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Purpose: The new scramble for Africa is marked by an influx of direct investment for the extraction and exploitation of the region’s natural resources, which has undoubtedly boosted the expansion of African commodities such as oil and minerals, as well as promoting rapid economic growth in several countries in the continent. Regrettably, Africa’s labour has been largely ignored, as most oil and mineral investments are capital-intensive and are likely to displace labour in local production, while also jeopardizing the continent’s job prospects. The study looked at the impact of FDI in the oil sector on labour employment in ten oil-rich African countries from 1995 to 2018 as part of its investigation into the new scramble and labour in Africa. Methodology/approach: The study used the Instrumental Variable (IV) regression in the context of the system Generalized Method of Moment (SGMM) estimator, based on dynamic panel modelling. Findings: The findings suggest that foreign investments in the oil sector have a positive, but not significant, impact on African labour employment. This suggests that during the review period, foreign investment in the oil sector did not result in a considerable increase in productive job opportunities in the oil-rich African countries. This study established that the new scramble for Africa in the shape of foreign investments in the oil sector did not result in job creation in the region. Originality/value: First, there is sparse literature on oil sector FDI-employment relations in Africa and this study extends literature by employing 10 oil-rich African nations. Second, unlike prior studies, this study applied advanced econometric techniques to account for the problems of unobserved heterogeneity specific to individual countries, cross-sectional dependence, serial correlation and endogeneity issues which are common in panel data regression. Third, this study will assist policymakers in the region to develop policies that will maximize the gains from the oil sector in Africa.

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“…This is because FDI in the manufacturing sector is more likely to have a positive impact on economic growth. A recent study by Abouelfarag and Abed (2019) found that FDI in the primary sector has no effect on economic growth in Egypt in the long run. In line with Abouelfarag and Abed (2019) in the context of Egypt, Hanafy and Marktanner (2019) and Ingham et al (2020) conclude that FDI in the primary sector and economic growth are irrelevant.…”

Section: Prior Literaturementioning

confidence: 98%

Spillover effects of FDI inflows on output growth: An analysis of aggregate and disaggregated FDI inflows of 13 MENA economies

Bergougui

Murshed

2023

Australian Economic Papers

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This paper examines the effect of foreign direct investment (FDI) inflows on overall growth, as well as its sector‐specific spillovers in the Middle Eastern and North African region during the period from 2000 to 2020. Our major innovation is our ability to disaggregate FDI into primary, secondary and tertiary and examine their individual impact on growth, as well as their sector‐specific spillovers by using dynamic panel GMM methodology. We find prima facie evidence that total FDI significantly stimulates growth. However, when we turn to the disaggregated FDI data, primary sector FDI adversely affects the gross domestic product (GDP) growth in the service sector and overall GDP growth. On the other hand, secondary FDI has a ‘double‐edged’ effect, benefiting its own sector (the service sector's GDP growth), but not other sectors. In contrast, service sector FDI stimulates GDP growth in mining, manufacturing and service sectors, thereby enhancing overall economic growth. Our findings have important policy implications regarding the incentives provided by governments to encourage FDI, which need to be fine‐tuned to attract certain types of FDI (tertiary), with less focus on the primary sector

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The impact of foreign capital inflows on economic growth and employment in Egypt

Cited by 14 publications

References 38 publications

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

The New Scramble for Africa’s Oil: Implication for Labour and Employment

Spillover effects of FDI inflows on output growth: An analysis of aggregate and disaggregated FDI inflows of 13 MENA economies

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