The Mediating Role of Economic Openness on the Relationship between Foreign Direct Investment and Economic Growth : A Case Study of Sudan ( 1980 - 2014 )

Financial development is recognized as an absorptive capacity in the relationship between foreign direct investment (FDI) and economic growth. Therefore, FDI effect on economic growth is contingent with the level of financial development. However, existing studies also show that financial development dampens economic growth through the “too much finance harms economic growth” hypothesis. Hence, there is a question of how far financial development should be developed to optimize the benefits of FDI on economic growth. The novelty of this study is that it reexamines the role of financial development in FDI-growth relationship by including the interaction term between FDI and the nonlinearity of financial development on economic growth in the period following the 2007–2008 Global Financial Crisis. Interestingly, our results demonstrate that the nonlinear relationship of financial development on economic growth is a U-shaped curve by using data from the 2009–2013 period, for 65 developing countries, which contrast the findings from previous studies. The absorptive capacity effects work nonlinearly, in that FDI accelerates growth after reaching a certain level of financial development, and that the positive effect originates from a minimum level. The study thus suggests that the level of financial development needs to be increased since it serves as a form of absorptive capacity enabling the positive growth effects of FDI in the recipient countries.

Download Full-text

Unleashing the Indirect Influence of FDI in Environmental Degradation via Financial Development and Economic Growth. New Evidence from Asian Countries

10.21203/rs.3.rs-32631/v2 ◽

2021 ◽

Author(s):

Ghulam Muhmmad Qamri ◽

Bing Sheng ◽

Rana Ejaz Ali Khan ◽

Wasisfah Hanim

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Financial Development ◽

Environmental Degradation ◽

Environmental Quality ◽

Direct Investment ◽

The Political ◽

Asian Countries ◽

Mediating Role

Abstract Background:Scholars in developed and emerging economies have widely tested the interactions between foreign direct investment, financial development, economic growth and environmental degradation. Despite a number of empirical and review studies, it is not yet wrap up either the associations are negative, positive, direct or indirect. Additionally, minor attention is given to the indirect role of foreign direct investment in environmental degradation; perhaps no study has yet demonstrated the mediating role of financial development and economic growth between foreign direct investment and environmental degradation in Asian economies. Referring to the fragmented outputs and consequences as well as lacking the indirect role, the present study examines the influence of foreign direct investment on environmental degradation with the mediating role of financial development and economic growth. Results:Secondary data of 21 Asian countries from 1980-2018 were gathered from World Bank Indicators and then performed STATA to test the paths. Our findings are slightly different from the studies conducted in developed economies. The results indicate that foreign direct investment significantly improves environmental quality by deteriorating environmental pollution. It also significantly improves economic growth in the selected regions. Surprisingly, our study shows that foreign direct investment has a significant negative influence on financial development in the Asian regions. Both financial development and economic growth significantly negatively influence environmental degradation in Asian regions. However, financial development partially mediates while economic growth does not play any mediating role between foreign direct investment and environmental degradation in the Asian countries. Trade openness and population growth as control factors do not show any significant role in the model. Conclusions:This research recommends policymakers to focus on the inflow of foreign direct investment in order to enhance economic growth and environmental quality. It is strongly suggested for policymakers to attenuate the political intervention (e.g. ensure the political stability) in the inflow of foreign direct investment, so financial resources can be impartially distributed in the industrial sector and thus the nations will have an effective financial development system. Other implications have described.

Download Full-text

On the Determinants of Economic Openness in Nigeria

Asian Journal of Economics Business and Accounting ◽

10.9734/ajeba/2020/v18i330287 ◽

2020 ◽

pp. 42-53

Author(s):

Charles Okechukwu Aronu ◽

Lucky Oghenechovwe Arhovwon ◽

John Obatarhe Emunefe ◽

Godspower Onyekachukwu Ekwueme ◽

Nkechi Udochukwu Otty

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Error Correction ◽

Unemployment Rate ◽

Direct Investment ◽

Urban Population ◽

Economic Openness ◽

Economic Determinants ◽

Long Run ◽

The Relationship

Aims: Economic openness has been identified as a tool that provides countries with an avenue to explore advances on technology, creation of exchanges through the reallocation of resources especially from less efficient to efficient producer, and economic growth. This study examined the short-run and long-run impact of economic determinants such as foreign direct investment, unemployment rate and percentage of the urban population on economic openness in Nigeria. Place and Duration of Study: The study employed a secondary source of data collection obtained from the Central Bank of Nigeria (CBN), Statistical Bulletin and National Bureau of Statistics (NBS) Annual Publication. The data comprises of variables such as economic openness which is proxy by trade openness, foreign direct investment, unemployment rate and percentage of the urban population from 2006 - 2019. Methodology: The impacts of the economic determinants considered in this study were examined using the Autoregressive Distributed Lag (ARDL) co-integration technique and the error correction parameterization of the ARDL model. The R-3.6.3 programming package was used to perform the analysis. Results: The outcome of the study revealed that the appropriate ARDL model for estimating economic openness was the ARDL (1,1,1,1) selected based on the Schwarz Bayesian Criterion. Also, the error correction model identified the sizable speed of adjustment by 30.0% of disequilibrium correction yearly for reaching the long-run equilibrium steady-state position. It was found that the lag of the Unemployment Rate (UNER) and the percentage of the urban population have a significant short-term effect on economic openness. Also, the distribution of economic openness was found to be stable over the observed period. Also, it was found that the relationship amongst the variables was independent except for the relationship between the percentage of the Urban Population (PUP) and Foreign Direct Investment (FDI) which was found to be is unidirectional. Conclusion: The outcome of this study suggested the urgent need for policymakers to implement policies such as the "ease of doing business" of the federal government of Nigeria which is anticipated to make foreign direct investment more attractive and in turn is expected to boost economic growth and thereby impact positively on urbanization in Nigeria.

Download Full-text

Unleashing the Indirect Influence of FDI in Environmental Degradation via Financial Development and Economic Growth. New Evidence from Asian Countries

10.21203/rs.3.rs-32631/v1 ◽

2020 ◽

Author(s):

Ghulam Muhmmad Qamri ◽

Bing Sheng ◽

Rana Ejaz Ali Khan ◽

Wasisfah Hanim

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Financial Development ◽

Environmental Degradation ◽

Environmental Quality ◽

Direct Investment ◽

The Political ◽

Asian Countries ◽

Mediating Role

Abstract Background:Scholars in developed and emerging economies have widely tested the interactions between foreign direct investment, financial development, economic growth and environmental degradation. Despite a number of empirical and review studies, it is not yet wrap up either the associations are negative, positive, direct or indirect. Additionally, minor attention is given to the indirect role of foreign direct investment in environmental degradation; perhaps no study has yet demonstrated the mediating role of financial development and economic growth between foreign direct investment and environmental degradation in Asian economies. Referring to the fragmented outputs and consequences as well as lacking the indirect role, the present study examines the influence of foreign direct investment on environmental degradation with the mediating role of financial development and economic growth. Results:Secondary data of 21 Asian countries from 1980-2018 were gathered from World Bank Indicators and then performed STATA to test the paths. Our findings are slightly different from the studies conducted in developed economies. The results indicate that foreign direct investment significantly improves environmental quality by deteriorating environmental pollution. It also significantly improves economic growth in the selected regions. Surprisingly, our study shows that foreign direct investment has a significant negative influence on financial development in the Asian regions. Both financial development and economic growth significantly negatively influence environmental degradation in Asian regions. However, financial development partially mediates while economic growth does not play any mediating role between foreign direct investment and environmental degradation in the Asian countries. Trade openness and population growth as control factors do not show any significant role in the model. Conclusions:This research recommends policymakers to focus on the inflow of foreign direct investment in order to enhance economic growth and environmental quality. It is strongly suggested for policymakers to attenuate the political intervention (e.g. ensure the political stability) in the inflow of foreign direct investment, so financial resources can be impartially distributed in the industrial sector and thus the nations will have an effective financial development system. Other implications have described.

Download Full-text

Empirical Research on the Relationship amongst Renewable Energy Consumption, Economic Growth and Foreign Direct Investment in Kazakhstan and Uzbekistan

Energies ◽

10.3390/en14020332 ◽

2021 ◽

Vol 14 (2) ◽

pp. 332

Author(s):

Janusz Grabara ◽

Arsen Tleppayev ◽

Malika Dabylova ◽

Leonardus W. W. Mihardjo ◽

Zdzisława Dacko-Pikiewicz

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Renewable Energy ◽

Energy Consumption ◽

Direct Investment ◽

Renewable Energy Sources ◽

Energy Sources ◽

Renewable Energy Consumption ◽

Integration Test ◽

The Relationship

In this contemporary era, environmental problems spread at different levels in all countries of the world. Economic growth does not just depend on prioritizing the environment or improving the environmental situation. If the foreign direct investment is directed to the polluting industries, they will increase pollution and damage the environment. The purpose of the study is to consider the relationship between foreign direct investment in Kazakhstan and Uzbekistan and economic growth and renewable energy consumption. The study is based on data obtained from 1992 to 2018. The results show that there is a two-way link between foreign direct investment and renewable energy consumption in the considered two countries. The Granger causality test approach is applied to explore the causal relationship between the variables. The Johansen co-integration test approach is also employed to test for a relationship. The empirical results verify the existence of co-integration between the series. The main factors influencing renewable energy are economic growth and electricity consumption. To reduce dependence on fuel-based energy sources, Kazakhstan and Uzbekistan need to attract energy to renewable energy sources and implement energy efficiency based on rapid progress. This is because renewable energy sources play the role of an engine that stimulates the production process in the economy for all countries.

Download Full-text

INVESTASI ASING LANGSUNG DAN PERTUMBUHAN EKONOMI DI WILAYAH ASEAN PERIODE 2004-2016

Jurnal Ekonomi dan Bisnis ◽

10.24123/jeb.v23i2.2012 ◽

2019 ◽

Vol 23 (2) ◽

pp. 57-66

Author(s):

Aditya Febriananta Putra ◽

Suyanto . ◽

Irzameingindra Putri Radjamin

Keyword(s):

Economic Growth ◽

Developing Countries ◽

Foreign Direct Investment ◽

Significant Role ◽

Direct Investment ◽

Negative Impact ◽

Positive Impact ◽

Accelerate Development ◽

Fixed Capital Formation

Exertions to accelerate development carried out by developing countries in general are oriented towards improving or improving people’s lives. Developing countries are characterized as countries that lack capital, savings and investment. The role of Labor has a significant effect but has a negative impact on economic growth. Agriculture and Service also performance a significant role, despite having a positive impact on economic growth. While other variables, namely Fixed Capital Formation, Foreign Direct Investment, Export, Manufacture, and Fertility showed insignificant results on economic growth.

Download Full-text

Agricultural Sector FDI and Economic Growth in Saarc Countries

International Journal of Recent Technology and Engineering - 2 ◽

10.35940/ijrte.b1019.0982s1019 ◽

2019 ◽

Vol 8 (2S10) ◽

pp. 116-121

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Agricultural Sector ◽

South Asians ◽

Secondary Data ◽

Agricultural Products ◽

Fdi Inflows ◽

Important Relationship ◽

The Relationship

The study seeks to establish the relationship between foreign direct investment to Saarc region agricultural sector and economic growth with secondary data. SAARC comprises 3% of the world's area, 21% of the world's population and 3.8% (US$2.9 trillion) making up a total of 3% of the world’s area. The country has second in all over the world in terms of agriculture position. The population obliquely all of the member states is over 1.7 billion, accounting for 21% of the world’s total population. In their 42% of the agricultural operation in SAARC nations and also 51% source of livelihood of the South Asians. The study has revealed that India alone accounts for 52 per cent of the agricultural products using the SAARC region peoples. For the present study, a total of 34 groups related to the agricultural products were selected out of the total groups. The techniques employed to analyze the data include descriptive statistic, correlation and linear forecast method. The study also revealed a positive and important relationship between economic growth and foreign direct investment flow to the agricultural sector. Thus, the study recommends that policy should focus on flexible trade policies to attract more foreign direct investment (FDI) inflows to SAARC nations. i.e. Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka including India

Download Full-text