The effect of FDI on domestic investment and economic growth case of three Maghreb countries

Ali, Walid; Mna, Ali

doi:10.1108/ijlma-09-2017-0214

Cited by 13 publications

(18 citation statements)

References 23 publications

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“…In general, most of the previous studies which have focused on analyzing the association between FDI and macroeconomic factors have found that FDI significantly influences the economic activities in both developed and emerging market economies (Li and Park, 2016; Li et al , 2017; Mowlaei, 2018; Hayat, 2018; Okechukwu et al , 2018; Mishra and Jena, 2019; Owusu-Nantwi and Erickson, 2019; Bhuimali et al , 2019; Pradhan et al , 2019; Onafowora and Owoye, 2019; Abouelfarag and Abed, 2019; Owusu-Nantwi and Erickson, 2019; Hagan and Amoah, 2019; Ali and Mna, 2019; Chandio et al , 2019; Saleem et al , 2020; Munir and Ameer, 2020; Ibhagui, 2020). Over the years, foreign investment has grown significantly in several developing economies and has become a key constituent of the local system.…”

Section: Introductionmentioning

confidence: 99%

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Saif‐Alyousfi¹

2020

CFRI

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PurposeThis paper investigates and compares the impact of foreign direct investment (FDI) inflows (flow and stock) on bank off-balance sheet (OBS) activities in aggregate as well as at the level of conventional and Islamic banks in GCC countries. It also tests hypotheses of direct and indirect impacts of FDI flow and FDI stock on OBS activities.Design/methodology/approachThis paper uses both static and dynamic panel generalized methods of moments (GMM) estimation techniques to analyze the data of 70 GCC banks (45 conventional and 25 Islamic banks) over the period 1995–2017.FindingsEmpirical results indicate that FDI flow and FDI stock have a significant negative direct impact on OBS activities of GCC banks. The results lend support for the direct channel hypothesis for the effect of FDI on OBS activities and find no evidence in support of the indirect channel hypothesis. OBS activities from conventional banks appear to be more affected than those from Islamic banks.Practical implicationsThe results of this study are expected to trigger appropriate policy response from the central banks of the respective GCC countries as well as their governments.Originality/valueIt is widely recognized that FDI inflows are of great importance to the economic development of emerging and developing countries. However, their impact on bank OBS activities has so far not been subject to accurate empirical assessment. This paper aims to fill this gap by providing an in-depth quantitative analysis of the impact of FDI flow and FDI stock separately, on bank OBS activities for both conventional and Islamic banks in GCC countries. It distinguishes between direct and indirect channels through which FDI flow and FDI stock may affect OBS activities for banks as a whole and both conventional and Islamic banks separately. It also uses both static and dynamic panel GMM estimation techniques to analyze the data.

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Section: Introductionmentioning

confidence: 99%

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Saif‐Alyousfi¹

2020

CFRI

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“…International capital flows play a significant role in a country’s macroeconomic and financial stability framework. Therefore, enormous investigations have been made in the empirical literature connecting capital flows with different macroeconomic and financial variables such as economic growth (Combes et al , 2017; Adams et al , 2017; Kodongo and Ojah, 2017; Adams and Klobodu, 2018; Adekunle and Sulaimon, 2018; Lasbrey et al , 2018; Comes et al , 2018; Bouchoucha and Ali, 2019; Ali and Mna, 2019; Opoku et al , 2019; Ikpesu, 2019). Also, between capital flows and employment and productivity (Baldwin, 1995; Zukowska-Gagelmann, 2000; Liu et al , 2001; Driffield et al , 2009; Girma et al , 2015; Li and Tanna, 2019).…”

Section: Brief Literature Reviewmentioning

confidence: 99%

Effect of capital flows on financial stability in middle-income countries

Ebire

Ullah

Adeleye

et al. 2021

JFRC

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Purpose This study aims to examine the effect of various forms of capital flows on financial stability in middle-income countries from 2010 to 2017 using the World Bank economy classifications of 121 economies. Design/methodology/approach Panel spatial correlation consistent approach was used in this study. Findings The findings provide convincing evidence that in middle-income countries, capital flows are positive and significant predictors of financial stability and that financial systems in advanced economies are more stable than those of emerging and developing countries. However, outward foreign direct investments are shown to have the largest potential for ensuring financial stability. Originality/value Globalization has fostered financial integration of nations, which is manifested in capital flows from lower-income countries to middle-income and upper-income countries and vice versa. These flows can lead to financial instability if not properly controlled. The authors show how the various forms of capital flows affect the financial stability in middle-income countries.

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“…Studies were conducted by researchers (Ansar, Flyvbjerg, Budzier, & Lunn, 2016;Saidi, Shahbaz, & Akhtar, 2018;Shi, Guo, & Sun, 2017) found relationship between road construction spending and economic growth. Meanwhile, other studies found a positive relationship between Foreign Direct Investment (FDI) and economic growth (Ali & Mna, 2019;Bakari, 2017;Hlavacek & Bal-Domanska, 2016;Bakari, 2017;Ali & Mna, 2019). Research by Lubis (2014) found that the number of workers had positive and significant effect on economic growth in Indonesia.…”

Section: Introductionmentioning

confidence: 99%

How important are health and education in boosting sub-national economic growth?

Verazulianti

Dawood

Zulham

2021

JSeD

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Development of the global economy is marked by increasing attention towards the health sector due to Covid-19 outbreak. This research contributes by examining how important is health and education for provincial economic growth, and connect it with foreign direct investments, and infrastructure spending. Taking Indonesia as a case study, and employing GMM and Fixed Effects methods, the analysis found that improving health and education outcomes are key for sub-national economic growth. However, foreign direct investment, domestic direct investment and public spending on infrastructure failed to support growth in the sub-national level. The finding is robust against alternative specifications. For policy suggestions, in order to dampen the negative economic effects of Covid-19 and to boost growth at post-pandemic period, government at all levels must maintain or even increase public spending in health and education which directly target improvements of health and educational outcomes. To ensure the improvements, public spending must be directed to provide good quality health and educational services; services which enhance health outcomes and develop students’ cognitive skills. In addition, good quality health and educational services must be evenly distributed across sub-nationalities. This is aligned with achieving the UN Sustainable Development Goals number 10; reducing inequality within a country.JEL Classification H51; H52; O15

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The effect of FDI on domestic investment and economic growth case of three Maghreb countries

Cited by 13 publications

References 23 publications

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Effect of capital flows on financial stability in middle-income countries

How important are health and education in boosting sub-national economic growth?

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