The effect of foreign direct investment on structural transformation in developing countries

Emako, Ezo; Nuru, Seid; Menza, Mesfin

doi:10.1080/23322039.2022.2125658

Cited by 8 publications

(4 citation statements)

References 52 publications

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“…Under this dynamic, capital formation would be closely related to structural change, promoting the transfer of resources toward efficient sectors. Additionally, some research has determined that the resignation of capital to urban areas and investment, both public and private, can promote structural transformation (Bustos et al 2020;Perez-Sebastian and Steinbuks 2017;Emako et al 2022;Guo et al 2021). These studies show that investment reduces agricultural employment and increases the share of employment in the modern sector (industry and services), which has a positive impact on the productivity of this sector, allowing it to grow and expand over time.…”

Section: Remittances Capital Formation and Structural Transformationmentioning

confidence: 99%

Is There a Link between Remittances, Capital Formation, Structural Transformation and Economic Growth? A Dynamic Panel Analysis for Latin America under the PVAR Approach

Zurita Moreano,

González Bautista,

Vallejo Mata

et al. 2024

Economies

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The literature has mainly focused on analyzing the relationship of remittances with economic growth and social welfare, neglecting more complex aspects where remittances can have relevant implications. To contribute to the literature, the objective of this research is to examine the dynamic relationship between remittances, capital formation, structural transformation and economic growth in 15 Latin American countries during the period 1996–2019. To meet the objective, a panel vector autoregressive regression (PVAR) model was estimated, focusing on the analysis of the impulse-response function and variance decomposition. The results show a positive effect of remittances on economic growth and capital formation and a negative effect of remittances on structural transformation for initial periods and positive for later periods, framing a non-linear relationship. In addition, it was determined that structural transformation does not have a significant impact on economic growth. Finally, it was found that capital formation has a partial positive effect on economic growth. It is concluded that public policies should generate support mechanisms for the efficient channeling of these resources so that they become engines of growth.

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Section: Remittances Capital Formation and Structural Transformationmentioning

confidence: 99%

Is There a Link between Remittances, Capital Formation, Structural Transformation and Economic Growth? A Dynamic Panel Analysis for Latin America under the PVAR Approach

Zurita Moreano,

González Bautista,

Vallejo Mata

et al. 2024

Economies

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“…According to Mamba et al (2020), foreign direct investment leads to structural changes in the economy, helping host countries raise capital, create new jobs, increase tax revenue flows and expand market opportunities. Moreover, foreign direct investment has an impact on changes in the structure of the economy through the development of productive capacity through technology transfer and management skills, the transfer of labour and other resources to higher productivity sectors and the creation of more competition for domestic companies (Emako et al, 2022). In this context, multinational enterprises can encourage the redistribution of labour between sectors of economic activity.…”

Section: Fdi and Structural Economic Changesmentioning

confidence: 99%

The Impact of Foreign Direct Investment from the Nordic Countries on the Structure of Lithuania’s Economy

Tvaronaviciene,

Simelyte,

Stirblyte

2023

MMI

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Foreign direct investment is considered a driving force for economic growth, boosting trade and reducing unemployment. The recipient country benefits from technology transfer. The host economy develops and changes its economic structure. The Baltic states, including Lithuania, attracted high volumes of Nordic FDI. The aim of the study is to evaluate the impact of inwards Nordic FDI on the economic structure of Lithuania. The research employed descriptive statistics, correlation regression and the Granger causality test. The stationarity of the data was checked by the augmented Dickey–Fuller test to evaluate the impact on the structural changes. The sectors were divided into primary, secondary and tertiary. The data have been structured according to the economic activities corresponding to the Nomenclature statistique des activités économiques dans la Communauté européenne (NACE) classification of economic activities in the European Union. The primary sector includes agriculture, forestry and mining. The secondary factors included manufacturing, construction, water and electricity supply, tertiary cover services and trade. Furthermore, for our research, we chose GDP per capita and gross value added (GVA). The GVA was chosen to evaluate the impact of each Nordic country’s FDI on different sectors. The sectoral contribution to the economy is expressed as GVA. This research was performed from three perspectives. The first is focused on the analysis of the flows and distribution of FDI in Lithuania by economic sector in the Nordic countries. Furthermore, we have analysed the impact of foreign direct investment in the Nordic countries on Lithuania’s economic growth. The final subsection is devoted to estimating the causal link between the distribution of FDI by economic sector in the Nordic European countries and the causal link between economic indicators in these sectors. Our study contributes to internationalization theory by extending it from a sectoral angle. In particular, the need to understand the impact of FDI from a single country on the host economy and its economic structure should be emphasized. We claim that inwards FDI might change the economic structure of the host economy in a positive or negative way. In addition, FDI should contribute to the economic advancement of host countries, which means that the tertiary sector should expand. The results of our study might be useful for improving FDI promotion policy in Lithuania while seeking long-term results in the expansion of the tertiary sector, especially knowledge-intensive activities. Main conclusion. We can conclude that Lithuania has the potential to benefit from inwards Nordic FDI; however, it still does not take all the advantages of these opportunities, as some FDI has no impact on the expansion of the tertiary sector or any sector at all.

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“…The Republic of Ecuador has been receiving development cooperation programs, but the country's overall condition still needs improvement. Although the right environment for Foreign Direct Investment has been maintained, it has not directly impacted poverty reduction or improved the standard of living for the population as a whole (Emako et al, 2023). However, it is worth noting that poverty would have been worse without these programs.…”

Section: Introductionmentioning

confidence: 99%

Artisanal Businesses: Historical and Economic Context

Alonso Aguilar,

González Alvarado,

Cabanelas Lorenzo

2024

myn

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The purpose of this paper is to examine the unique features of artisan enterprises in Ecuador and how cooperation programs and national peculiarities have influenced their development. Through descriptive and conceptual analysis, we can better understand how these organizations have evolved within the historical and economic context of rural regions in Ecuador. The primary findings suggest that poverty alleviation and control measures have significantly impacted the definition of artisan enterprises in Ecuador, which now closely resemble micro-enterprises. Development cooperation efforts in Ecuador have prioritized preserving artisanal production rather than replacing it with industrial production, promoting micro-enterprises growth as artisanal workshops.

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The effect of foreign direct investment on structural transformation in developing countries

Cited by 8 publications

References 52 publications

Is There a Link between Remittances, Capital Formation, Structural Transformation and Economic Growth? A Dynamic Panel Analysis for Latin America under the PVAR Approach

Is There a Link between Remittances, Capital Formation, Structural Transformation and Economic Growth? A Dynamic Panel Analysis for Latin America under the PVAR Approach

The Impact of Foreign Direct Investment from the Nordic Countries on the Structure of Lithuania’s Economy

Artisanal Businesses: Historical and Economic Context

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