scholarly journals The Relationship between International Trade and Economic Growth

2019 ◽  
Vol 1 (02) ◽  
pp. 112-123
Author(s):  
Putri Dewi Purnama ◽  
Ming Hung Yao
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
International Trade ◽  
Exchange Rate ◽  
Direct Investment ◽  
Positive Impact ◽  
The Exchange Rate ◽  
Asean Countries ◽  
The Relationship

The aim of this study is to find the relationship between international trade and economic growth in ASEAN countries. Three independent variables used to measure the economic growth include international trade, the exchange rate, and foreign direct investment. This study employs a pedroni panel cointegration test to examine the data from 2004 to 2015. The results show that there is a long term cointegrated relationship between international trade and economic growth in the ASEAN countries. International trade and foreign direct investment also have a long term, positive impact on economic growth. Meanwhile, the exchange rate also has a long term, negative influence on the economic growth. In addition, there is an indirect relationship and bidirectional causalities between the GDP and international trade, as well as between the GDP and the exchange rate. On the other hand, there is a direct relationship and a bidirectional causality between international trade and the exchange rate. The FDI leads GDP, international trade, and exchange rates. Our results suggest that international trade must be supported by government policies that aim to enhance the financing of new investment for economic growth.

scholarly journals Influence of Exchange Rate on Foreign Direct Investment Inflows: An Empirical Analysis Based on Co-Integration and Granger Causality Test

2021 ◽  
Vol 2021 ◽  
pp. 1-12
Author(s):  
Lan Tan ◽  
Yifan Xu ◽  
Alemayehu Gashaw
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Close Association ◽  
Causality Test ◽  
Fdi Inflows ◽  
The Exchange Rate

Although it is widely recognized that Foreign Direct Investment (FDI) inflows have a dominant effect on economic growth of host countries, the determinants of FDI inflows are still unclear. Especially, about the effect of exchange rate on FDI inflow, the results reached by scholars vary across countries or regions. It is of great practical and theoretical significance to explore the influencing effects of exchange rate on FDI inflow and identify the mechanisms that underlie them in close association with regional economic characters so as to help local government implement targeted government policies to achieve sustainable FDI inflow and sustainable economic growth. For this purpose, the influencing effects and the influencing mechanisms of the exchange rate on FDI inflows are investigated for Zhejiang province, China, over 1985–2019 by employing the co-integration tests, vector error correction models, Granger causality tests, and impulse response tests. Empirical results indicate that there are long-term stable and unidirectional causal relationship between the exchange rate and FDI inflow. Continuous appreciation of RMB against USD discourages FDI inflow. The mechanism which underlies the long-term relationship is the wealth effect, rather than the cost effect or the demand effect. By contrast, in the short run, neither the exchange rate nor the three influencing mechanism has a significant impact on FDI inflow. These results suggest policy recommendations for improving FDI by accumulating human capital and improving infrastructure. These findings are also applicable for other countries or regions with similar economic characters.

scholarly journals An empirical study of the real effective exchange rate and foreign direct investment in Vietnam

2020 ◽  
Vol 17 (4) ◽  
pp. 1-13
Author(s):  
Tram Thi Xuan Huong ◽  
My-Linh Thi Nguyen ◽  
Nguyen Thi Kim Lien
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Positive Impact ◽  
Real Effective Exchange Rate ◽  
The Real ◽  
Effective Exchange ◽  
The Exchange Rate ◽  
Effective Exchange Rate ◽  
The Relationship

Foreign direct investment (FDI) inflows to Vietnam have increased significantly in recent years. Theoretically, capital inflows will put pressure on the overvaluation of local currencies in countries, despite different exchange rate mechanisms. So, the problem facing the Vietnamese government is the need to examine the relationship between the exchange rate and FDI in order to develop effective policies. This study examined the relationship between the exchange rate and FDI in Vietnam in the period of 2005–2019 using the VAR (vector autoregression) model based on quarterly frequency data. The new points of this study are: (i) using the real effective exchange rate (REER) of the Vietnamese currency with 143 major trading partners of Vietnam; and (ii) adding two control variables into the VAR model to examine the relationship between the exchange rate and FDI in Vietnam – a case study for developing countries. The findings show that, firstly, there is a positive causal relationship between FDI and Vietnam’s real effective exchange rate. Secondly, trade openness has a positive impact on FDI and REER in Vietnam. Thirdly, economic growth has an impact on REER, but no statistically significant impact on FDI was found. The findings can provide useful information to help policymakers plan and make decisions on future policies and support further research studies.

scholarly journals A time series analysis of determinants of FDI in Afghanistan: Which one matters the most, security or economic growth?

2018 ◽  
Vol 6 (2) ◽  
pp. 19
Author(s):  
Abdul Fareed Delawari
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Direct Investment ◽  
Time Series Analysis ◽  
Direct Investment ◽  
Economic Factors ◽  
Market Economic ◽  
The Government ◽  
The Relationship

Afghanistan has been practicing market economic system since 2002. Since then, the government has been initiating different policies and announced various incentives to attract foreign direct investment (FDI) to the country. However, the outcome has not been satisfactory due to several political and economic factors. This paper explores the relationship between security, economic growth and FDI in Afghanistan, using ARDL model. The paper covers a period from 2002 to 2016. The empirical results of this study show that there is a negative long-term relationship between security and FDI. Hence,  the author concludes that, to attract FDI to the country, insuring security should be the top priority of the government of Afghanistan.

scholarly journals An Evaluation of Relationship between Foreign Direct Investment and Economic Growth in Vietnam

2014 ◽  
Vol 220 ◽  
pp. 79-96
Author(s):  
Anh Phạm Thị Hoàng ◽  
Thu Lê Hà
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Significant Contribution ◽  
Foreign Capital ◽  
Positive Impact ◽  
National Economic ◽  
Investment Law ◽  
The Relationship

Foreign direct investment (FDI) is an essential source of capital in the gross investment conducive to national economic growth, including the case of Vietnam. Since the 1987 Foreign Investment Law, the country has attracted a large amount of foreign capital, which makes a significant contribution to economic development. This research employs a VAR model to analyze the relationship between FDI and Vietnam’s economic growth. The results suggest that FDI has a positive impact on the latter and vice versa. The research also finds that FDI stimulates export and improves the quality of human resources and technology - important prerequisites for the economic growth.

scholarly journals THE RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH OF PAKISTAN

2019 ◽  
Vol 58 (1) ◽  
pp. 115-124
Author(s):  
Rummana Zaheer ◽  
Shahana Kiramat
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Positive Impact ◽  
Secondary Data ◽  
Significant Relation ◽  
Explanatory Variables ◽  
Augmented Dickey Fuller ◽  
The Relationship

Although it is very common to argue that the foreign direct investment is beneficial for the economic development of a nation. This exploration investigates the connection amongst FDI and economic development in case of Pakistan. In this study secondary data from 1985 to 2016 is taken to examine the relationship. The investigation included GDP as explained and exports and FDI as explanatory variables. To check data either it is stationary or not the study used Augmented Dickey Fuller test in our study. After making data stationary we have used OLS method to investigate the nature of relationship between the variables. Our results show that there is direct link amongst explained and explanatory variable. The findings also show that there is significant relationship between FDI and economic growth. After analyzing the calculations we came to know that foreign direct investment is a significant element for the economic development because it has positive impact and have significant relation with growth of an economy. Since FDI is an impressive element in economic development so, government should take steps to attract the foreign investors and make policies to encourage the trade liberalization to gain more from the foreign investment.

scholarly journals Foreign Direct Investment (FDI), Trade and Its Contribution to the Mining Sector of Guinea

2016 ◽  
Vol 7 (2) ◽  
pp. 65
Author(s):  
Kimberly Racquel Elizabeth Chin
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Gross Domestic Product ◽  
Direct Investment ◽  
Mining Industry ◽  
Domestic Product ◽  
Mining Sector ◽  
The Government ◽  
The Relationship

In order to objectively analyze Foreign Direct Investment (FDI) contribution to Guinea’s mining sector, the granger casualty test was used to determine the relationship among variables and to determine whether any of these variables affect others and how. The variables used are Gross Domestic Product, Government Income, Trade, FDI inflow into Guinea mining sector and the exchange rate. The granger casualty test produced evidence of a bidirectional casualty relationship which suggests that FDI’s influence on efficiency lies in the government relaxing its dependency on the mining industry for economic  growth.

scholarly journals ANALISIS PENGARUH VARIABEL MAKRO EKONOMI TERHADAP INVESTASI ASING LANGSUNG (STUDY KASUS CHINA-INDONESIA).

2017 ◽  
Vol 6 (2) ◽  
pp. 103
Author(s):  
Ririn Martini Rezki ◽  
Yeniwati Yeniwati ◽  
Mike Triani
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Time Series Data ◽  
Least Square ◽  
Series Data ◽  
Short Term

This research to analyze the influence of macro economic variables impact on Chinese Foreign Direct Investment in Indonesia. The influence of China’s economic growth, Indonesia’s economic growth, interest rates, inflation and exchange rates against Foreign Direct Investment (FDI) China in Indonesia in the long term and short term. Type of this research is descriptive research, the secondary data use form time series data, from 2001Q1 – 2016Q4, taken  from agencies and related institution, the analysis using the Ordinary Least Square (OLS) and Error Correction Model (ECM) to see the influence in a long term and impact in the short term. This research show that Indonesia’s economic growth of China’s economic growth and inflation is have a significant effect in the long term Chinas’s FDI in Indonesia. Variable economic growth of Indonesia’s, interest rates, inflation, exchange rate in the short term influence China’s Foreign Direct Investment in Indonesia. How ever in the long term interest rates and exchange rate do not influence significantly, to China’s FDI in Indonesia.

scholarly journals Exchange Rate Movement and Foreign Direct Investment in Asean Economies

2014 ◽  
Vol 2014 ◽  
pp. 1-10 ◽  
Author(s):  
Jaratin Lily ◽  
Mori Kogid ◽  
Dullah Mulok ◽  
Lim Thien Sang ◽  
Rozilee Asid
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Positive Impact ◽  
World Market ◽  
The Philippines ◽  
Annual Data ◽  
Causality Test ◽  
Long Run ◽  
The Exchange Rate

The inflows of foreign direct investment (FDI) are important for a country's economic development, but the world market for FDI has become more competitive. This paper empirically analyses the exchange rate movements and foreign direct investment (FDI) relationship using annual data on ASEAN economies, that is, Malaysia, the Philippines, Thailand, and Singapore. By employing ARDL bounds test approach, the empirical results show the existence of significant long-run cointegration between exchange rate and FDI for the case of Singapore, Malaysia, and the Philippines with all countries recording negative coefficient implying that the appreciation of Singapore dollar, Malaysian ringgit, and the Philippine peso has a positive impact on FDI inflows. Using the ECM based ARDL approach for causality test, both Singapore and the Philippines show long-run bidirectional causality between exchange rate and FDI whereas long-run unidirectional causality running from the exchange rate to FDI in Malaysia. Furthermore, this study also found that short-run unidirectional causality running from the exchange rate to FDI exists in Singapore.

scholarly journals Impact of Exchange Rate on Economic Growth of Bangladesh

2021 ◽  
Vol 6 (3) ◽  
pp. 173-175
Author(s):  
Md. Fazlul Huq Khan
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Least Squares Method ◽  
Positive Impact ◽  
Ordinary Least Squares ◽  
Nominal Exchange Rate ◽  
Series Data ◽  
The Impact

This paper investigates the impact of inflation, nominal exchange rate, foreign direct investment, and unexpected event shock on the economic growth of Bangladesh by using the time series data from 1990 through 2020. Augmented Dickey-Fuller and Phillips-Perron Unit Root Test used to identify unit-roots existence and check the stationary of variables. The Ordinary Least Squares method is applied to determine the relationship between the dependent variable and independent variables. The results revealed that the exchange rate and foreign direct investment have significantly affected the country's economic growth. Inflation, FDI, and exchange rate positive impact, whereas unexpected events like Covid-19, natural disasters, etc., negatively affect the economic development of Bangladesh. The study can be helpful for the policy makers to identify, formulate and implement the effect policies for the economic growth of the country.

scholarly journals The Relationship Between Foreign Direct Investment Oriented Economic Growth in Uganda: An Empirical Study Based on VAR Model

2021 ◽  
Author(s):  
Nabyonga Barbra ◽  
Hina Nawaz
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Var Model ◽  
Vector Autoregressive Model ◽  
Causality Test ◽  
Vector Autoregressive ◽  
Long Run ◽  
The Relationship

The purpose of this paper is to investigate the relationship between Foreign Direct Investment (FDI) and Economic growth as measured by Gross Domestic Product (GDP) over Uganda, from 1980-2018. Vector Autoregressive Model (VAR) and Granger Causality test were used. The results show thatlag 1 is the optimal lag hence bivariate VAR (1) model was used. GDP and FDI exhibits long-term equilibrium since the two-time series are cointegrated in long run. The causality test indicates that there exists a unilateral relationship between FDI and GDP, and FDI causes GDP growth and not vice versa. Understanding these causality links can help in future forecasting of Uganda's economic growth.

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