Foreign direct investments, institutional quality, and economic growth

Hayat, Arshad

doi:10.1080/09638199.2018.1564064

Cited by 134 publications

(115 citation statements)

References 36 publications

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“…In summary, FDI can have a positive or negative effect on the economy's growth prospects depending on the kind of role institutions' play. (Hayat, 2019) confirmed the proposition provided the evidence that FDI-led growth was only observable in low-middle income countries. In high-income economies, FDI was found to slow down economic growth even after inducing the role of institutional quality.…”

Section: Literature Reviewsupporting

confidence: 69%

Financing Inclusive Growth through FDI: Incorporating the Role of Institutional Quality

Munir

Fatima

2020

GER

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Countries need a tremendous amount of investment to utilize existing resources and enhance productivity in order to ensure inclusive growth in the economy. Foreign Direct Investment (FDI) by providing the required investment can fulfil the saving-investment gap. The paper makes an empirical investigation of the effectiveness of FDI as a financing tool for inclusive growth. The study also examines how the effectiveness of FDI varies across economies with varying level of institutional quality. The results suggest that FDI plays a significant role in achieving inclusive growth, especially in economies with a low and medium level of institutional Quality. A deep underpinning of our inclusive growth variable brought thoughtful insights such as low and middle-income economies, which mostly belong to the low and medium level of institutional quality cluster. They should adopt policies that enhance the existing spectrum of opportunities. Whereas equity should be the top-most priority for high-income economies.

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Section: Literature Reviewsupporting

confidence: 69%

Financing Inclusive Growth through FDI: Incorporating the Role of Institutional Quality

Munir

Fatima

2020

GER

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“…There has been quite a lot of research that discusses the effect of FDI on economic growth in a country, but most of them only see the impact directly and not examine the spillovers effect that comes from FDI. Evidence from the literature on FDI and economic growth suggests that the effect of increasing FDI to a country depends on the absorptive capacity of developing countries to maximize the benefits that derived from technology transfer and the productivity spillovers (Hayat, 2019;Li & Tanna, 2019) Borensztein, E., De Gregorio, J., and Lee (1998) studied the influence of human capital on the relationship between foreign direct investment and the growth of GDP per capita found that only when the host country reaches the minimum level of human capital, FDI can contribute to economic growth. Recent research conducted by Slesman et al (2015) provides strong evidence that foreign capital inflows (including foreign direct investment) have a positive impact on economic growth to countries with high institutional quality, while countries with poor institutional quality tend to have a negative or insignificant impact.…”

Section: Foreign Direct Investmentmentioning

confidence: 99%

Foreign Direct Investment Spillovers and Economic Growth: Evidence from Asian Emerging Countries

Rismawan

Haryanto

Handoyo

2021

EKU

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Research on FDI in promoting economic growth has been the focus of recent decades, especially in developing countries. Foreign direct investment can be one of the main objectives in increasing economic growth. FDI is assumed to indirectly contribute to economic growth through a spillover effect on the absorption capacity of a country by increasing the stock of human capital and the quality of institutions. This study aims to analyze the spillover effect of FDI on economic growth in Asian emerging markets. The data were analyzed using dynamic panel regression (GMM) during 2008-2017 period with STATA 14 software.The results in this study strongly indicate that the spillovers of FDI is proven to be able to drive economic growth through human capital and institutions in Asian emerging markets.

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“…The feeling of "being unprotected" and the high cost of dispute resolution make FDI firms, intent on minimizing costs and risks, choose to link with other FDI firms instead of domestic ones. Hayat (2019) assessed how the impact of FDI on national growth depends on the quality of institutions. Using data from 104 countries in three groups (low-income, middle-income, and high-income) this study shows that high institutional quality increases the positive effect of FDI on the growth rate of low-income and middle-income countries.…”

Section: 23mentioning

confidence: 99%

Determinants of linkages between foreign direct investment firms and domestic firms in Vietnam

Tuan¹

2021

Int. j. adv. appl. sci.

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Foreign direct investment (FDI) is an important sector of many developing economies in general and of Vietnam in particular. In Vietnam, the FDI sector contributed up to 27.7% of the average economic growth rate of 6.0% per year from 2010 to 2018. Besides this contribution, operations of FDI in Vietnam reveal many limitations, the most noticeable of which is the weak linkage between FDI and Vietnamese firms. This article examines determinants of FDI-domestic firms linkage in Vietnam. This research looks at all three types of linkage, including horizontal linkage, vertical linkage, and supply-backward linkage. Factors that have a positive impact on linkages are provincial economic growth, firms’ technology level, regional factors, being located in industrial zones, and operating in the manufacturing sector. Macroeconomic instability has a negative impact on linkage. The quality of economic governance, as measured by the Provincial Competitiveness Index, is important for attracting FDI, but does not affect linkages.

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Foreign direct investments, institutional quality, and economic growth

Cited by 134 publications

References 36 publications

Financing Inclusive Growth through FDI: Incorporating the Role of Institutional Quality

Financing Inclusive Growth through FDI: Incorporating the Role of Institutional Quality

Foreign Direct Investment Spillovers and Economic Growth: Evidence from Asian Emerging Countries

Determinants of linkages between foreign direct investment firms and domestic firms in Vietnam

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