Literature review on fdi and economic growth. A Literature Review on the Relationship between Foreign Direct Investment and Economic Growth 2019-01-26

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A Literature Review on the Relationship between Foreign Direct Investment and Economic Growth

literature review on fdi and economic growth

The study estimated the impact of stock market development and foreign private investment on economic growth in Nigeria over the period of 1985—2016, using secondary data from various publications of the Central Bank of Nigeria. And within the relation, there exist several influencing factors such as the adequate levels of human capital, the well-developed financial markets, the complementarity between domestic and foreign investment and the open trade regimes, etc. National bureau of economic research. How does foreign direct investment affect economic growth?. A positive significance of the agglomeration factor is also observed, confirming the relevant theoretical propositions. The study found that foreign remittances and foreign direct investment have significantly positive role in the economic growth process of Pakistan. .

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(PDF) Foreign Direct Investment and Economic Growth Literature Review from 1994 to 2012

literature review on fdi and economic growth

Cockcroft and Riddell 1991 and Meier 1994 found in their study that firms choose a location for investment because of the comparative advantage in terms of low inflation rates, availability of raw materials, good infrastructure, adequate labour force and low capital cost. The F calculated value is greater than the F critical value which shows that the overall model was significant. First, China has better transportation and communication infrastructure, therefore better business efficiency. World Bank and Heritage Foundation time series data for the 1980-2017 period are published. The findings clearly indicate that there is rising and falling trend in the values of interest rate over the past 25 years. World, 1 1 , 002-005. Doing so will allow management to be better positioned to achieve such goals.

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Foreign Direct Investment and Economic Growth Literature Review from 1994 to 2012

literature review on fdi and economic growth

The purpose of this study is to examine and better understand the effects of foreign direct investments on employment in Montenegro over the period from 2005-2017. Finally, the study concluded that provision and improvement of infrastructure and power as well as enforcement of investor-friendly policies by the government is needed as these will encourage the establishment of more firms and industries that will participate in the stock market, thereby contributing to the growth of the economy. Vissak, Tiia, and Tõnu Roolaht. Does foreign direct investment accelerate economic growth? Copyright United Nations University 2006. How does foreign direct investment affect economic growth?. Inflation rate The findings in the Table 1 and Figure 3 given above indicate the trend of annual average inflation rate values over the time period of 1991-2015. Economic growth is also important for a country to improve the living standard of its people by education and other health facilities.

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Impact of Foreign Direct Investment on the Economic Growth of Pakistan

literature review on fdi and economic growth

Foreign direct investment is one of the important sources of capital inflows. The obtained results are not surprising, considering the fact that the observed period is characterized by a modest share of the greenfield investment within the total structure of foreign direct investments in the Montenegrin economy. The existing literature highlights the effects of foreign direct investment on the economic growth of a developing country particularly Pakistan. Nigeria is in the forefront of African Nations who depend fully on foreign goods and services for consumption through high level of importation and has been one of the top destination countries for Foreign Direct Investment. The results suggest that it is important to encourage domestic as well as foreign investment to put Malaysia back on its precrisis growth path. Podrecca and Carmeci 2001 came up with the findings that investment is the most important determinant of economic growth as identified by neoclassical and endogenous growth models.

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Foreign Direct Investment and Economic Growth Literature Review from 1994 to 2012

literature review on fdi and economic growth

On one hand, some scholars argue that foreign direct investment could stimulate technological change through the adoption of foreign technology and know-how and technological spillovers, thus boosting host country economies. The empirical study is based on the bound testing approach of cointegration advanced by Pesaran, et al. However, there is a lag period of two. This paper sums up the literature as well as empirical studies on the relationship between foreign direct investment and economic growth, trying to arrive at a meaning revelation eventually. Inflows of direct investment were an important influence on growth rates for higher income developing countries, but not for lower income ones. Foreign direct investment-led growth: evidence from time series and panel data.

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A Literature Review on the Relationship between Foreign Direct Investment and Economic Growth

literature review on fdi and economic growth

However, certain differential variables, such as the privatization, could not be fully captured due to the statistical homogeneity of the sample. Arab Economic and Business Journal, 10 2 , 82-89. These conclusions emerge from a reassessment of Glenn Firebaugh's broad critique of capital dependency research, which exposed an important error in earlier studies. This is pertinent to encourage greater population of the citizenry to invest in the stock market. The environmental quality includes savings and financial development, trade openness, human capital development and technological development of the host country. Inflation Rate The findings on the inflation rate nominal values are shown in Table 1 above and Figure 3 below. Model Specification To determine the relationship between foreign direct investment and economic growth in Pakistan, the study conducts multilinear regression analysis among the variables.

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Impact of Foreign Direct Investment on the Economic Growth of Pakistan

literature review on fdi and economic growth

In sharp contrast, any causal relationship is absent in the primary sector. Interest rate The findings presented in the above Table 1 and Figure 5 indicate the trend of interest rate values over the period of 1991-2015. One implication of economic policy derived from this research is to maintain a good macroeconomic and legal environment. Review of World Economics, 140 2 , 211-229. New York and Geneva, 31-40. Global production sharing and rising inequality: A survey of trade and wages No.

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(PDF) Foreign Direct Investment and Economic Growth Literature Review from 1994 to 2012

literature review on fdi and economic growth

So, the impact of foreign direct investment on the economic growth of the host country is still debatable. Our findings suggest that certain variables such as privatization and trade regime, as well as the density of infrastructure, appear to be robust under different specifications. We introduced a dummy regression variable to determine if the increase in administrative spending is positively related to an income increase, considering years with income increases and decreases. Multiple Regression Analysis The study conducts multiple regression analysis to determine the relationship between foreign direct investment and economic growth in Pakistan. Our results also suggest that foreign direct investment is positively correlated with economic growth in the host countries.

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Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship

literature review on fdi and economic growth

There are various important determinants for economic growth, i. The findings indicate fluctuating levels of interest rate values with annual variations over the last 25 years. The sectors examined are: farm food crops, livestock product, forestry, fishery, mining and quarrying, non-oil and gas industry, electricity, gas and water, construction, retail and wholesale trade, hotels and restaurant, transport and communications, and other private and services sectors. It means that other factors not included in this study contribute 3. Exchange Rate The findings on the exchange rate nominal values are shown in Table 1 above and Figure 4 below: Figure 4. So, there is a gap between saving and desired level of investment which can be filled by external capital inflows. Technology transfer can be taken place in the host country through multinational firms while spill overs could be occurred by the interaction of domestic firms through the interaction of multinational firms with domestic firms, suppliers, customers and work force.

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