Does Foreign Direct Investment Enhance Economic Growth? Evidence from 30 Leading Global Economies

Okwu, Andy Titus; Oseni, Isiaq Olasunkanmi; Obiakor, Rowland Tochukwu

doi:10.1177/0974910120919042

Cited by 35 publications

(33 citation statements)

References 43 publications

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“…Before we estimate our model, we examine the order of integration of the variables via common unit root process which is peculiar to panel data sets (Barbieri, 2006). This is necessary to ensure unbiasedness when applying the PLS to our data set (Okwu et al , 2020). In case ofnon-stationarity of data set, transformation of data sets may be appropriate to ensure common stationarity and subsequently PLS can then be used (Baum, 2013; McManus, 2011).…”

Section: Methodsmentioning

confidence: 99%

Shadow economy in Africa: how relevant is financial inclusion?

Ajide

2021

JFRC

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Purpose This study aims to investigate the possible relationship between financial inclusion and shadow economy in selected African countries. Design/methodology/approach The study uses panel data estimation technique and Toda and Yamamoto causality approach. The data of selected African counties over a period of 2005–2015 are sourced from World Bank Development Indicators, International Monetary Fund International Financial statistics database and International Country Risk Guide. Findings The results show that financial inclusion reduces the size of shadow economy. The causality results show that there is a unidirectional causality moving from financial inclusion to shadow economy. The results demonstrate that a country with lower level of corruption and higher level of growth can benefit more in reducing the size of shadow economy through financial inclusion. Originality/value This study provides the first evidence of the link between financial inclusion and shadow economy from the Sub-Saharan Africa perspective. The study suggests that financial inclusion may be useful in affecting the size of shadow economy in Africa.

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Section: Methodsmentioning

confidence: 99%

Shadow economy in Africa: how relevant is financial inclusion?

Ajide

2021

JFRC

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“…Secondly, there was no evidence of a causal relationship between the variables. Okwu et al ( 2020 ) examined the impact of FDI inflow on the 30 leading economies in the world. The outcomes revealed that FDI inflow exerts a positive and significant impact on economic growth in these economies.…”

Section: Review Of Empirical Literaturementioning

confidence: 99%

Assessment of Foreign Direct Investment-Led Growth Argument in South Africa Amidst Urbanization and Industrialization: Evidence from Innovation Accounting Tests

2022

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The objective of this study is to investigate the FDI-led growth hypothesis for the case of South Africa for the period between 1970 and 2017. The preliminary analysis of unit root test using traditional methods shows a different order of integration, which necessitates the use of autoregressive distributive lag (ARDL) methodology. Additionally, the current study also leverages on the innovative accounting techniques which comprised of impulse response function and forecast error variance decomposition (FEVD), which are employed to explore the responsiveness of the variables on each other. Our study results show that FDI inflow exerts a very strong positive impact on economic growth, thus validating the FDI-induced growth nexus in the South African economy. Furthermore, causality results show a one-way link running only from FDI inflow to economic growth and a unidirectional connection from urbanization to FDI inflow. The implication is that only urbanization matters in attracting FDI inflow to South Africa. These outcomes suggest that there is a need for the government administrators to develop urban centers through improving infrastructure facilities and the provision of industrial zones as a way of expanding both the ready market and the absorptive capacity of the country.

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“…Using 30 leading global economies for the period 1998 to 2017. Okwu et al (2020) analyzed how the flow of FDI affects economic growth. Controlling for variables such as consumer price index, trade openness, unemployment gross fixed capital formation, and credit to the private sector, the findings from the econometric analysis showed that during the period under study, there is a positively significant influence of FDI on economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Over the years, a variety of channels through which this objective will be realized have been implemented by different countries. Investment being a key component of aggregate expenditure in any economy, is vital to growth through improved productivity levels and employment (Okwu, Oseni & Obiakor, 2020). Most developing countries are using the attraction of Foreign Direct Investment as a means to enhance economic growth.…”

Section: Introductionmentioning

confidence: 99%

Effects of foreign direct investment on economic growth in Ghana: the role of institutions

Kulu

Mensah

Sena

2021

Economics of Development

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The role of institutions in both the inflow and the impact of foreign direct investment is of great im¬portance. The quality of institutions in a country can direct investment towards improving growth. This paper analyzes the individual and combined effect of foreign direct investment and institutions on economic growth in Ghana. The paper used the Auto Regressive Distributed Lag (ARDL) tech¬nique for secondary data obtained from 1995 to 2019. All data series, except for the quality institution index, were drawn from the World Bank Development Indicators. Institutional Quality Index data was obtained from the Heritage Foundation’s Economic Freedom Index website. The results of the ARDL model indicate that foreign direct investment and a quality institutional index together have a significantly positive effect on a country’s economic growth compared to their individual effects in both the short and long run. The study recommends that government policies should be aimed at attracting foreign direct investment while strengthening institutions and regulations to enhance output growth.

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Does Foreign Direct Investment Enhance Economic Growth? Evidence from 30 Leading Global Economies

Cited by 35 publications

References 43 publications

Shadow economy in Africa: how relevant is financial inclusion?

Shadow economy in Africa: how relevant is financial inclusion?

Assessment of Foreign Direct Investment-Led Growth Argument in South Africa Amidst Urbanization and Industrialization: Evidence from Innovation Accounting Tests

Effects of foreign direct investment on economic growth in Ghana: the role of institutions

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