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

2019 ◽  
Vol 36 (3) ◽  
pp. 258-276
Author(s):  
Hanan AbdelKhalik Abouelfarag ◽  
Mohamed Sayed Abed
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Investment ◽  
External Debt ◽  
Capital Inflows ◽  
Aggregate Model ◽  
Employment Level ◽  
Content Type ◽  
Foreign Capital Inflows ◽  
The Impact

Purpose The purpose of this paper is to trace the effects of both foreign direct investment (FDI) and external debt on economic growth and employment in Egypt over the 1985–2014 period. Design/methodology/approach The empirical analysis includes three stages: an aggregate time series analysis, a panel model that includes six economic sectors and a set of single-sector models. The “autoregressive distributed lag” approach is utilized either in the time series or in the panel models. Findings The empirical results of this research reveal that foreign investment exerts a weak positive effect on economic growth and employment in Egypt. External debt exerts an insignificant effect on economic growth and employment in the aggregate model. The sectoral analysis reveals that the effect varies greatly between sectors; the effect of FDI on output is positive in the financial, tourism and other service sectors, while it is insignificant in the agricultural, construction and manufacturing sectors. Practical implications It is important not to depend on external debt as an easy way to obtain capital. Greater efforts should be exerted to increase the absorptive capacity of the Egyptian economy so as to benefit from the positive spillover effect of foreign investment as much as possible. Originality/value With respect to Egypt, very limited studies have focussed on the role of external debt on growth and that of FDI and external debt on the employment level. There is no general agreement concerning the effect of FDI on economic growth. Therefore, this research explores the effect of FDI and external debt on the Egyptian economy utilizing both aggregate and sectoral data.

Foreign capital inflows and economic growth: the experience of low-income countries in Sub Saharan Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Atif Awad
Keyword(s):  
Low Income ◽  
Foreign Capital ◽  
Ordinary Least Squares ◽  
Capital Inflows ◽  
Sub Saharan Africa ◽  
Low Income Countries ◽  
Content Type ◽  
Long Run ◽  
Foreign Capital Inflows ◽  
The Impact

Purpose This paper aims to investigate the long-run impact of selected foreign capital inflows, including aid, remittances, foreign direct investment (FDI), trade and debt, on the economic growth of 21 low-income countries in the Sub Saharan Africa (SSA) region, during the period 1990–2018. Design/methodology/approach To obtain this objective and for robust analysis, a parametric approach, which was dynamic ordinary least squares, and a non-parametric technique, which was fully modified ordinary least squares, were used. Findings The results of both models confirmed that, in the long run, trade and aid affected the growth rate of the per capita income in these countries in a positive way. However, external debt seemed to have an adverse influence on such growth. Originality/value First, this is the initial study that has addressed this matter across a homogenous group of countries in the SSA region. Second, while most of the previous studies regarding capital inflows into the SSA region have focused on the impact of only one or two aspects of such foreign capital inflows on growth, the present study, instead, examined the impact of five types of foreign capital inflows (aid, remittances, FDI, trade and debt).

scholarly journals Are some taxes better for growth in Pakistan? A time series analysis

2018 ◽  
Vol 45 (10) ◽  
pp. 1439-1452 ◽  
Author(s):  
Kashif Munir ◽  
Maryam Sultan
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
International Trade ◽  
Sales Tax ◽  
Tax Base ◽  
Content Type ◽  
Long Run ◽  
Indirect Taxes ◽  
Short Run ◽  
The Impact

Purpose The purpose of this paper is to analyze the impact of taxes on economic growth in the long run as well as in the short run. Design/methodology/approach The study uses simple time series model, where real GDP is dependent variable and different forms of taxes are explanatory variables under ARDL framework from 1976 to 2014 at annual frequency for Pakistan. Findings Direct taxes have positive relation with economic growth in the long run. Sales tax, tax on international trade (tariffs) and other indirect taxes have positive impact on economic growth of Pakistan in the long run as well as in the short run. However, sales tax and other indirect taxes impact negatively on economic growth in the short run after one year because people realize decline in their real income. Practical implications Government should increase direct taxes by increasing tax base. Indirect taxes usually indicate negative impact after one and two years; therefore, government should decrease its reliance on indirect taxes. Government should promote tax awareness among the people which increase the tax morale of people and increase the tax base. Originality/value Taxes are disaggregated into direct and indirect taxes, while indirect taxes have been further disaggregated into excise duty, sales tax, surcharges, tax on international trade and other indirect taxes. This study provides useful insight for policy makers in designing taxes and their effect on growth.

Environmental impact of economic growth, emission and FDI: systematic review of reviews

2019 ◽  
Vol 11 (1) ◽  
pp. 81-134 ◽  
Author(s):  
Neha Saini ◽  
Monica Sighania
Keyword(s):  
Economic Growth ◽  
Carbon Emission ◽  
Capital Inflows ◽  
Kuznets Curve ◽  
Negative Effects ◽  
Research Papers ◽  
Content Type ◽  
The Status ◽  
Review Of Reviews ◽  
Foreign Capital Inflows

PurposeThe purpose of this paper is to organize the detailed review of economic growth, carbon emission and foreign capital inflows and its impact on the environment. Another objective of the study is to provide the comprehensive bibliography and to analyze the findings and results of the studies undertaken in review.Design/methodology/approachThis paper examined 111 research papers from a sample of thousands of papers, based on inclusion criteria, in this area of research. These 111 research papers are categorized on the basis of several factors to know the status of research on this topic.FindingsThis study is based on economic development and carbon emission and its impact on the environment. We tried to gather all the available facts based on this topic and found that the topic is gaining high relevance in the present scenario because of the growing pace of development in developing countries. Most of the studies supported the environmental Kuznets curve hypothesis and we also found that significant amount of literature is available which supports cleaner FDI as a measure to mitigate the negative effects of economic growth on the ecological environment.Originality/valueBased on the literature review from various sources, this study provides the collection, classification and comprehensive bibliography on this topic, which may be helpful for stakeholders such as academicians, researchers and policymakers working particularly in this area of research.

scholarly journals Financial Liberalization, Economic Growth and Investment Strategy: Lessons from Taiwan for New Industrial Countries

2015 ◽  
Vol 3 (2) ◽  
pp. 188 ◽  
Author(s):  
Yu-Wei Lan ◽  
Dan Lin ◽  
Lu Lin
Keyword(s):  
Economic Growth ◽  
Institutional Investors ◽  
Foreign Capital ◽  
Investment Strategy ◽  
Capital Inflows ◽  
Investment Efficiency ◽  
The Real ◽  
Foreign Capital Inflows ◽  
Foreign Institutional Investors ◽  
The Impact

<p><em>To examine the impact of foreign capital inflows on Taiwan’s economy after internet bubbles of 2000, this study adopts data from the first quarter of 2001 to the second quarter 2015 to test if foreign capital inflows have positive impacts on Taiwan’s economic growth. This study also uses program trading and aims to prove that with financial liberalizations, the investment efficiency of foreign institutional investors is better than domestic institutional investors.</em></p><p><em>The results from the error correction model shows that capital formation, domestic savings and foreign direct investment all have positive relationships with the real economic growth. However, the rate of financing and foreign debt and depreciation all have negative relationships with the real economic growth. The results are all statistically significant. Hence, they do not completely support the hypothesis that foreign capital inflows are beneficial for economic growth.</em></p><p><em>Moreover, this study proves that the futures market in Taiwan is not strong-form market efficient. This result provides support for the hypothesis that the investment efficiency of foreign institutional investors is higher than that of domestic institutional investors. Investors can therefore raise their investment performance by following the investment strategies of foreign institutional investors.</em></p>

The impact of the quality of democracy on the economic growth of provinces in Indonesia

2021 ◽  
Vol 1 (2) ◽  
pp. 121-132
Author(s):  
Nairobi Nairobi ◽  
◽  
Nur Rita Santi ◽  
Fadeli Yusuf Afif ◽  
◽  
...  
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Investment ◽  
Good Condition ◽  
Series Data ◽  
Positive Trend ◽  
Analysis Tool ◽  
Quality Of Democracy ◽  
The Impact

Abstract Purpose: The impact of democracy on economic growth is an interesting study of economic institutions and there is still debate about the impact on economic growth. One side of the research finds that democracy has a significant and positive impact on economic growth, but the other side states that the improvement of the country's democracy causes economic growth to decline. This study aims to examine the impact of the quality of democracy on economic growth at the provincial level in Indonesia. Research methodology: The data used in this study use panel data using the Eviews 9.0 analysis tool, so that the best method named the Random Effect Model is obtained. Result: The results show that democracy in Indonesia has a significant impact on economic growth and there is a positive trend in the long run. Other variables used are labor and foreign investment, which statistically, if these variables occur, can increase economic growth in Indonesia and increase employment and data on foreign investment play a role in driving economic growth. Economic growth in Indonesia is already in good condition and the economic growth that occurs is convergence growth which shows that some provinces that are poor/underdeveloped can catch up with developed provinces. Limitations: This study uses fairly short time-series data, so that the addition of a longer time-series will of course give better results. Contribution: Improvements in democracy in Indonesia should also strengthen democratic norms that apply in society, such as reducing corrupt behaviors, especially political corruption and money politics to get public office because if this behavior cannot be corrected, then democracy will have little impact on the economy.

scholarly journals The nexus between external debt, corruption and economic growth: evidence from five SSA countries

2018 ◽  
Vol 9 (3) ◽  
pp. 319-334 ◽  
Author(s):  
Waliu Olawale Shittu ◽  
Sallahuddin Hassan ◽  
Muhammad Atif Nawaz
Keyword(s):  
Economic Growth ◽  
External Debt ◽  
Negative Relationship ◽  
Panel Cointegration ◽  
Causality Test ◽  
Content Type ◽  
Long Run ◽  
Cointegration Tests ◽  
The Impact ◽  
Ssa Countries

Purpose The purpose of this paper is to examine the impact of external debt and corruption on economic growth in the selected five Sub-Saharan African (SSA) countries, from 1990 to 2015. Design/methodology/approach Panel unit root and panel cointegration tests are employed to test for stationarity of the series and the long-run relationship, respectively. Fully modified OLS and dynamic OLS techniques are also employed to examine the long-run coefficients of the variables of the model, as well as panel Granger causality test, in order to examine the direction of causality among the variables. Findings The results indicate that there is a negative relationship between external debt and economic growth, as well as a bi-directional causality between the two variables. The findings also indicate a positive relationship between corruption and economic growth, as well as a uni-directional causality running from economic growth through corruption. Research limitations/implications The study recommends that the governments of the selected countries should address the menace of rising external debt through the adoption of other sources of capital for investment. Such include more openness of the economy for more capital, by easing restrictions on genuine imports and exports of valuable goods and services. It also suggests that the issue of corruption be tackled head-on, by such penalties that tend to make corruption less attractive. Originality/value While the relationship between economic growth and external debt, on the one hand, and corruption and economic growth, on the other hand, have received considerable attentions, the trio of external debt, corruption and economic growth have not been found combined in a model, to the best of the authors’ knowledge. Also, the countries under consideration, who jointly account for about 47 percent of the entire SSA countries’ stock of external debt, have not been jointly found in any recent panel studies involving the selected variables.

scholarly journals The impact of foreign capital shifts on economic activities and asset prices: a threshold VAR approach

2020 ◽  
Vol 4 (3) ◽  
pp. 87-104
Author(s):  
Boubekeur Baba ◽  
Güven Sevil
Keyword(s):  
South Korea ◽  
Emerging Markets ◽  
Asset Prices ◽  
Foreign Capital ◽  
Emerging Market ◽  
Capital Inflows ◽  
Economic Activities ◽  
Content Type ◽  
Foreign Capital Inflows ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of foreign capital shifts on economic activities and asset prices in South Korea. Design/methodology/approach The authors in this paper apply the Bayesian threshold vector autoregressive (TVAR) model to estimate the regimes of large and low inflows of foreign capital. Then, structural impulse-response analysis is used to check whether the responses of the variables differ across the estimated regimes. The model is estimated using quarterly data of foreign capital inflows, gross domestic product (GDP), consumer price index, credit to the private non-financial sector, real effective exchange rate (REER), stock returns and house prices. Findings The main findings suggest that large inflows of gross foreign capital, foreign direct investments (FDI) and foreign portfolio investments (FPI) are ineffective to boost economic growth, but large inflows of other foreign investments (OFIs) significantly contribute to GDP. The decreases in the foreign capital inflows are associated with larger depreciation of REER. The large inflows of gross foreign capital, FDI and OFIs are associated with further expansion of credit supply to private non-financial sectors. Research limitations/implications The policy implications of foreign capital inflows are of particular importance to all the emerging markets alike. However, the empirical analysis is limited to the case of South Korea due to various reasons. The experience with international capital inflows among emerging markets is heterogeneous. Therefore, it would be better to take each case of emerging market individually. In addition, TVAR analysis requires a long data sample, which unfortunately is not available for most of the emerging markets. Originality/value The foreign capital inflows are shown to be procyclical and notoriously volatile in many studies. Nevertheless, this topic has commonly been studied using linear VAR models, which do not properly deal with the cyclical characteristics of foreign capital inflows. This study attempts to resolve these methodological limitations by examining a non-linear VAR model that is capable of capturing the structural breaks associated with the cyclical behaviors of foreign capital inflows.

scholarly journals The asymmetric and threshold impact of external debt on economic growth: new evidence from Egypt

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mesbah Fathy Sharaf
Keyword(s):  
Economic Growth ◽  
Structural Breaks ◽  
Negative Impact ◽  
External Debt ◽  
Threshold Level ◽  
Substantial Contribution ◽  
Content Type ◽  
Long Run ◽  
The Impact ◽  
Nardl Model

PurposeWithin a multivariate framework, this study examines the asymmetric and threshold impact of external debt on economic growth in Egypt during the period 1980–2019.Design/methodology/approachThe paper uses a nonlinear autoregressive distributed lag (NARDL) bounds testing approach to cointegration and a vector error-correction model to estimate the short- and long-run parameters of equilibrium dynamics. A multiple structural breaks model is estimated to test nonlinearity in the relationship between external debt and economic growth.FindingsResults of the NARDL model show a robust statistically significant negative long-run impact on economic growth stemming from both positive and negative external-debt-induced shocks. In terms of magnitude, on the one hand, the impact of external-debt-induced negative shocks exceeds that of the positive. In the short and long run, on the other hand, the growth impact of external debt in Egypt is symmetric. There is also support for the nonlinearity hypothesis in which a negative impact on growth of external debt obtains once the threshold level of external debt-to-GDP ratio equals or exceeds 96.7%.Practical implicationsIdentifying the threshold level after which external debt becomes harmful to economic growth would help inform policymakers in Egypt about maximum external debt levels that can be sustained without impairing economic growth.Originality/valueThe current study makes a substantial contribution to the extant literature on the debt-growth tradeoffs. It breaks ground by being the first tract that examines, using a NARDL model, asymmetry and nonlinearity of debt-growth tradeoffs in Egypt.

The impact of infrastructure investment and development on economic growth on BRICS

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rohit Apurv ◽  
Shigufta Hena Uzma
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Panel Data ◽  
Least Square ◽  
Infrastructure Investment ◽  
Content Type ◽  
Brics Countries ◽  
Effect Model ◽  
Telecommunication Infrastructure ◽  
The Impact

Purpose The purpose of the paper is to examine the impact of infrastructure investment and development on economic growth in Brazil, Russia, India, China and South Africa (BRICS) countries. The effect is examined for each country separately and also collectively by combining each country. Design/methodology/approach Ordinary least square regression method is applied to examine the effects of infrastructure investment and development on economic growth for each country. Panel data techniques such as panel least square method, panel least square fixed-effect model and panel least square random effect model are used to examine the collective impact by combining all countries in BRICS. The dynamic panel model is also incorporated for analysis in the study. Findings The results of the study are mixed. The association between infrastructure investment and development and economic growth for countries within BRICS is not robust. There is an insignificant relationship between infrastructure investment and development and economic growth in Brazil and South Africa. Energy and transportation infrastructure investment and development lead to economic growth in Russia. Telecommunication infrastructure investment and development and economic growth have a negative relationship in India, whereas there is a negative association between transport infrastructure investment and development and economic growth in China. Panel data results conclude that energy infrastructure investment and development lead to economic growth, whereas telecommunication infrastructure investment and development are significant and negatively linked with economic growth. Originality/value The study is novel as time series analysis and panel data analysis are used, taking the time span for 38 years (1980–2017) to investigate the influence of infrastructure investment and development on economic growth in BRICS Countries. Time-series regression analysis is used to test the impact for individual countries separately, whereas panel data regression analysis is used to examine the impact collectively for all countries in BRICS.

Foreign inflows and economic growth in Pakistan: some new insights

2020 ◽  
Vol 13 (3) ◽  
pp. 97-113
Author(s):  
Muhammad Tahir ◽  
Ahmad Ali Jan ◽  
Syed Quaid Ali Shah ◽  
Md Badrul Alam ◽  
Muhammad Asim Afridi ◽  
...  
Keyword(s):  
Economic Growth ◽  
Employment Level ◽  
Content Type ◽  
Significance Level ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
External Sources ◽  
The Impact

Purpose The purpose of this paper is to explore the contending role of important external inflows on the economic growth of Pakistan economy. The main purpose behind focusing on Pakistan is that it is receiving significant inflows from different international sources such as International Monetary Fund, World Bank and Asian Development Bank. Design/methodology/approach The study adopted the autoregressive distributed lag cointegration approach for the purpose of exploring the long-run cointegrating relationship among the variables. As Pakistan Government had been implementing some major liberalization policies during 1990s, data from 1976 to 2018 is used to estimate the specified models to reflect the impact of the surge of foreign inflows occurring from that time. In addition, error correction model is estimated for examining the short-run relationships. Findings The findings revealed the significant role played by different inflows in accelerating the economic growth. According to results, in the long run, all inflows, for example, Foreign direct investment (FDI), debt, official developdment assistance and remittances, have influenced significantly and positively the economic growth. The two control variables such as inflation and employment level included in the model have also played their expected role in the growth process. In the short run, some of the variables such as remittances, FDI and inflation rate have lost their significance level while for debt, aid and employment level, the signs of their coefficients become reversed. Practical implications Based on the findings, the study suggests the policymakers of Pakistan economy to liberalize the economy and attract more inflows from the external sources to accelerate economic growth. Originality/value To the best of the authors’ knowledge, this is the first comprehensive empirical study on the role of foreign inflows in the process of economic growth in the context of Pakistan economy.

Sign in / Sign up

Export Citation Format

Share Document