Public debt, foreign direct investment and economic growth dynamics

Onafowora, Olugbenga A.; Owoye, Oluwole

doi:10.1108/ijoem-01-2018-0050

Cited by 38 publications

(49 citation statements)

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“…Our finding of negative impact of foreign direct investments inflow on public debit in the case of members of EMU was previously confirmed by other authors (Onafowora & Owoye, 2019;Jimborean & Kelber, 2017: Swamy, 2015. This finding is supported by statistics data which indicate that only Chinese foreign direct investment in the EU has increased in only eight years from 700 million in 2008 to 35 billion euros in 2016 (Haneman & Houtari, 2018, p.10).…”

Section: Discussion and Concluding Remarkssupporting

confidence: 88%

“…Some papers indicated that a relation between public debt and foreign direct investments inflow is inversed (Onafowora & Owoye, 2019;Jimborean & Kelber, 2017;Swamy, 2015). Mixed effects of foreign direct investments on economic growth and debt were discoveredon example of European transition economies by Bayar and Sasmaz (2019).…”

Section: Literature Reviewmentioning

confidence: 99%

“…A third group of authors points to the large heterogeneity of debt in developed and developing countries (Simionescu, 2016;Ramzan & Ahmad, 2014;Okafor & Tyrowicz, 2009;Okafor & Tyrowicz, 2010;Spilioti & Vamvoukas, 2015;Alvarado et al, 2017). In addition, the most researched relationships are public debt relations with economic growth (Ono, 2019;Panizza & Presbitero, 2013;Mencinger et al, 2014;Reinhart & Rogoff, 2010;Baum et al, 2013;Ogawa et al, 2016), taxes and fiscal adjustment (Alcidi et al, 2016;Baldacci & Kumar, 2010;Gali & Perotti, 2003;Heinemann et al, 2014;Reinhart & Rogoff, 2009;Reinhart & Rogoff, 2011;Laeven & Valencia, 2018;Baunsgaard & Keen, 2005;Pirtea et al, 2013;Globan & Matosec, 2016), bank loans (Barrios et al, 2010;Jorda et al, 2016;Gourinchas & Obstfeld, 2012;Lane & Milesi-Ferretti, 2011;Lane, 2012;Schularick & Taylor, 2012;Schafer, 2012;Gargouri & Ksantini, 2016), unemployment (Ono, 2019;Hassan & Nassar, 2015;Karafolas & Alexandrakis, 2015;Marelli & Signorelli, 2015), and foreign direct investment (Onafowora & Owoye, 2019;Jimborean & Kelber, 2017;Swamy, 2015;…”

mentioning

confidence: 99%

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Public debt’s predictors in EU: evidence from members and non-members of European Monetary Union

Pjanić

Milenković

Andrašić

et al. 2020

Economic Research-Ekonomska Istraživanja

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The global economic crisis destabilised the public debt of many countries. The purpose of this paper is to investigate the predictors of public debt in European Union countries divided into nonmember countries and members of the European Monetary Union in the period from 2001 to 2018. The aim is to discover their relationship with public debt and make recommendations for economic policy-makers. The empirical analysis was based on comparative research design, quantitative methodology and secondary data collection. It included 13 variables, with public debt being the dependent variable and the selected 12 economic indicators were treated as predictors. The analysis was based on a procedure for linear mixed models in the IBM SPSS. The basic finding was that only unemployment was statistically significant predictor of public debt in both groups of countries. Other predictors differed, and there were statistically significant differences in the magnitude of their impacts. Obtained results indicate that unemployment is one of the most important problems of all European Union countries. In addition, a major challenge for monetary and fiscal policy-makers will be profiling adequate tax, credit, and interest rate policies to reduce debt and accelerate economic growth.

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Section: Discussion and Concluding Remarkssupporting

confidence: 88%

Section: Literature Reviewmentioning

confidence: 99%

mentioning

confidence: 99%

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Public debt’s predictors in EU: evidence from members and non-members of European Monetary Union

Pjanić

Milenković

Andrašić

et al. 2020

Economic Research-Ekonomska Istraživanja

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show abstract

“…The coefficients of inflation in the long run and the short run model are significantly negative. A higher inflation is a symptom of lack of commitment and discipline in monetary policy, and therefore, higher inflation hinders economic growth by impeding productivity growth and investment (Fisher, 1993;Onafowora & Owoye, 2018).…”

Section: Cointegration: Bounds Test Resultsmentioning

confidence: 99%

Effect of Foreign Direct Investment on Economic Growth of Pakistan: The ARDL Approach

Jehangir¹,

Lee²,

Park³

2020

Glob Bus Financ Rev

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This study investigates the effect of foreign direct investment on the economic growth of Pakistan. It also explores the role and contribution of various variables in the growth of the country's economy. Design/methodology/approach: This study examines both the long run and the short run relationship between the variables over the period 1974-2018 by the Auto-Regressive Distributed Lag approach. Findings: We find that in the long run, FDI, gross fixed capital formation and labor force participation have positive effect on the economic growth, whereas military expenditures have negative effect. In the short run model, however, gross fixed capital formation was indicative of having a significantly negative relationship with the economic growth while variables such as FDI, military expenditures and labor force participation were found to have positive impact. Inflation turned out to be significant but negative in both of the models while final consumption expenditure showed insignificance in both of the models. Research limitations/implications: Notwithstanding its contribution to the literature, this study has limitations as well. Apart from those measures adopted in this research, there are also other important measures necessary for a country's economic growth such as skilled labor, work environment, infrastructure, security, technology, and so on. Yet, due to the lack or unavailability of reliable data source, we have not included these valuables in our research. If incorporated in the analysis, these measures may provide more accurate results. Pakistan is a country where military engages in various business activities such as operating department stores, military schools, universities, and hospitals and as well as constructing roads and buildings. Thus such services and contributions of the military, if studied thoroughly, may provide better statistics regarding inward FDI and its contribution towards economic growth of the country. As a policy implication, this study suggests that the Pakistani government should focus on the necessary reforms to attract more FDI, since a low-capital country like Pakistan cannot underestimate the significance of FDI for a sustainable growth. Further researches may be conducted with a focus on the growth-investment possibilities of China Pakistan Economic Corridor. Studies can also be conducted which incorporate agricultural sectors, public and private investments, trust (between land/firm owners and labor) and the existing work/business environment in order to investigate the determinants of economic development of the country. Originality/Value: To the best of our knowledge, there is only one study by Nilofer & Qayyum (2018) that uses the ARDL model to investigate the impact of FDI on economic growth of Pakistan. While they analyzed the variables including GDP, government consumption expenditure, public investment, FDI and lending rate, our study involves military expenditure, labor force participation, final consumption expenditure, gross fixed capital formation, inflation, a...

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“…The research also shows empirically, that there is an inverse relationship between conflict and development (Khan & Haque, 2019). The scholars have found that higher levels of public debt and inflation rates have a significant positive impact on development (Onafowora & Owoye, 2019).…”

Section: Literature Reviewmentioning

confidence: 73%

Influence of fiscal policy on GDP: an empirical study of GCC countries

Khalil

Pandow

2020

Investment Management and Financial Innovations

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The Gulf Cooperation Council (GCC) countries of late have made considerable attempts to achieve financial consolidation. However, this was limited to cuts in government expenditures. While scholars suggest the need for overall fiscal policy adjustments, countries should pay particular attention to efficient revenue generation and public debt management. In this paper, an attempt has been made to examine public finance of the GCC countries. The study has taken into account four significant components of public finance: public revenue, inflation, government expenditure and public debt. The co-integration rank test using the vector auto-regression method is employed to determine whether the chosen variables play any influential role in the GDP of the GCC economies. The results suggest that the effect of the consumer price inflation, total government revenue, revenue (percent of non-oil), and total government gross debt have a strong influence on the GDP of these economies. Thus, this means that the countries in the GCC region should focus on inflation, revenue, and public debt to have robust, viable and comprehensive development.

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Public debt, foreign direct investment and economic growth dynamics

Cited by 38 publications

References 50 publications

Public debt’s predictors in EU: evidence from members and non-members of European Monetary Union

Public debt’s predictors in EU: evidence from members and non-members of European Monetary Union

Effect of Foreign Direct Investment on Economic Growth of Pakistan: The ARDL Approach

Influence of fiscal policy on GDP: an empirical study of GCC countries

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