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This paper examines the causal relationship between FDI and economic growth by using an innovative econometric methodology to study the direction of causality between the two variables. We apply our methodology, based on the Toda-Yamamoto test for causality, to time-series data covering the period 1969–2000 for three developing countries, namely Chile, Malaysia and Thailand, all of them major recipients of FDI with a different history of macroeconomic episodes, policy regimes and growth patterns. Our empirical findings clearly suggest that it is GDP that causes FDI in the case of Chile and not vice versa, while for both Malaysia and Thailand, there is a strong evidence of a bi-directional causality between the two variables. The robustness of the above findings is confirmed by the use of a bootstrap test employed to test the validity of our results. [ABSTRACT FROM AUTHOR]

This paper examines the impact of remittances on economic growth, using developing countries in Asia and the Pacific as a case study. Using data for the period 1993–2013, our results show that remittances only generate negative and significant impacts on economic growth if they reach 10 percent of GDP or higher. A remittances‐to‐GDP ratio of below 10 percent could still impact growth negatively, but the effect is statistically insignificant. The present study finds some degree of substitutability between remittances and financial development. Foreign direct investment (FDI), but not other types of capital inflow, contributes significantly to economic growth. Other traditional growth engines, including education, trade openness, and domestic investment, are crucial in promoting growth in developing Asian and Pacific nations. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of Chinese activities in sub-Saharan African countries with respect to the growth performance of economies in that region. Using a Solow-type growth model and panel data for the period 1991 to 2010, we find that African economies that export natural resources have benefited from positive terms-of-trade effects. In addition, there is evidence for displacement effects of African firms due to competition from China. On the other hand, Chinese foreign investment and aid in Africa does not appear to have a significant impact on African growth. [ABSTRACT FROM AUTHOR]

This paper analyzed drivers of foreign direct investments (FDI) to West Africa using a panel dataset from 1970 to 2010. OLS and GMM techniques are used for the estimations. The main results indicate that there is a U-shaped relationship between economic development and FDI inflows to West Africa. In summary: (i) The quadratic element of real per capita GDP, domestic investment, trade openness, first year lag of FDI, natural resources (oil and metals) endowment and exports, and monetary integration have positive and significant effect on FDI inflows to West Africa; and (ii) there is a negative relationship between FDI inflows to the sub-region and loan component of ODA, economic growth, level of economic development (real GDP per capita), life expectancy, and domestic credit to the private sector. [ABSTRACT FROM AUTHOR]

This paper examines the influence of foreign direct investment (FDI) on economic growth in five SAARC member countries - Bangladesh, India, Nepal, Pakistan, and Sri Lanka. Using time series data from 1990 to 2010, an empirical model is estimated in which growth of real GDP depends on FDI, investment, openness, tax policy and inflation. After establishing the stationarity of the data series, cointegration tests are performed, and an error correction model is developed and estimated. The empirical results indicate that, unlike investment and openness to international trade, FDI has not played a significant role in promoting economic growth in these countries. We conclude that the effectiveness of FDI may depend in part on the size of the inflows, as well as the level of economic development. [ABSTRACT FROM AUTHOR]

Empirical studies on international trade highlight the role of innovation on international exchange but do not capture the effect of technological innovation when unobservable common factors (UCFs) are considered. This paper examines the long‐run relationship between technological innovation and international exchange using panel data for eight African countries over the period 1981–2013. The non‐stationarity and cointegration between technological innovation, international exchange, public investment, real gross domestic income and foreign direct investment were examined, controlling for cross‐sectional dependence and heterogeneity between countries. The results suggest that technological innovation in Africa remains low after controlling for UCFs, while public investment, real gross domestic product and foreign direct investment have significant impact on international exchange. Moreover, the results from the homogeneous and heterogeneous estimates, with and without UCFs, show that ignoring UCFs is likely to bias the coefficients. These findings reveal that African countries should invest more in public infrastructures and research and development to upgrade their capability To play an active role in the international market. [ABSTRACT FROM AUTHOR]

The paper examines the impact on Foreign Direct Investment inflows of a series of institutional and regulatory adjustments that were implemented by or imposed upon countries in the European Union (EU) following the start of the financial crisis. The study of 28 EU members over a period that includes the economic crisis era (1995–2015) provides evidence that these adjustments (government efficiency, quality of regulation, cost competitiveness, and reduction of corruption) matter only for the countries that are more financially robust but have no influence for the countries that received aid, and macroeconomic factors such as market size and trade openness are important. [ABSTRACT FROM AUTHOR]

Since 2001, the exports of foreign-invested enterprises (FIEs) have accounted for more than 50 percent of China's total exports. As foreign capital occupies a high proportion of the total capital of FIEs, most FIEs' capital gains are foreign factor income. Although these gains are calculated as a part of China's GDP, they do not belong to China's national income. To determine the real contribution of exports to China's welfare, the present paper analyses the impact of exports on China's national income using a non-competitive input-output model capturing processing trade. The results show that every US$1000 of China's exports generates US$506.8 of national income. The real contribution of exports to China's welfare is much smaller than what we expected. This suggests that China should endeavor to improve the gains from international markets or find another engine to maintain its economic growth. [ABSTRACT FROM AUTHOR]

This paper aims to identify the main causes of bilateral trade flows in OECD countries. The specific features of the study include the explicit introduction of R&D and FDI as the two important explanatory variables, conduct of unit root tests in the panel data framework and careful consideration of endogeneity. The main findings are that the levels and similarities of market size, domestic R&D stock and inward FDI stock are positively related to bilateral trade, while the distance, measured by both geographical distance and relative factor endowment, between trade partner countries has a negative impact. These findings lend support to new trade, FDI and new growth theories. [ABSTRACT FROM AUTHOR]

Copyright of African Development Review / Revue Africaine de Développement is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The author comments on an article "Innovation and economic growth in East Asia: An overview" by A.G. Hu which appeared in 2015 issue of the journal "Asian Economic Policy Review." Topics discussed include a chart depicting purchasing power parity-based per capita gross domestic product of various economies in the country, total factor productivity and foreign direct investment in South Korea. The author compares the patents, science and technology papers of the U.S. Patent and Trademark Office.

ABSTRACT This paper investigates the short-run impact of shocks in international capital flows channeled through foreign direct investment (FDI) and foreign aid on national output and export performance in five Central Asian economies under a dynamic multivariate structural vector autoregressive (SVAR) framework. The identification of structural shocks is implemented by AB model based on IS-LM-BP postulates. The main message is that external capital shocks are persistent and small open economies are weak to absorb them. Overall, the aid shocks reduce national outputs, while FDI increase it, on average. The expansion of global demand (G20) leads to an increase in domestic GDPs, notably in Kazakhstan, Kyrgyzstan and Uzbekistan. The impact is augmented by a positive effect of FDI on export channel (and net exports) that shift the IS curve upwards. We cannot find any significant aid-FDI nexus in the region, except in Kazakhstan. The structural variance decomposition (SFEVD) results suggest that external flows and foreign demand together explain the bigger part of variability in domestic GDP and exports. Finally, variations in foreign capital, aid and FDI, are mainly explained by series themselves. The role of domestic activities is found to be weaker for aid and greater for FDI. The results could be attributed to rigid exchange rates, high trade dependence, and necessity for foreign capital to explore natural resources in Central Asian region. Our results provide some valuable suggestions to improve an investment climate for boosting economic growth. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

There is now a substantial empirical literature examining the determinants of aid effectiveness. A large part of this makes inferences based on a regression incorporating aid (as a share of recipient GDP) interacted with some institutional or policy variable. Recently, some authors have questioned the statistical robustness of such regressions, pointing out that results vary according to the way aid is measured and the estimator applied to the data. Moreover, the regression equations used to test hypotheses about the determinants of aid effectiveness are often introduced without any corresponding formal theory. We explore aid-policy interaction terms in the context of a simple theoretical model, showing how different nonlinearities may be conflated. The resulting difficulties in the interpretation of aid-growth regressions are illustrated in the context of a seminal paper in the conditional aid effectiveness literature. One simple change in the way that aid is measured - in per capita terms rather than as a fraction of GDP - completely changes the regression results. This indicates that adding interaction terms to otherwise linear regression equations is an inadequate way of capturing the nonlinearities in the growth process. Our aim is to re-emphasise the importance of grounding. [ABSTRACT FROM AUTHOR]

This study aims to reinvestigate the long run relationship between credit market development and economic growth in Nigeria covering the years between 1981 and 2016 by applying recently developed econometric techniques. In addition to measures of credit market development indicators of domestic credit to the private sector and broad money, trade openness, foreign direct investment and urbanization are also included in estimations to overcome the omitted variable problem. The measure for economic growth used is real gross domestic product. To the best of our knowledge, no study has been conducted before, examining these relationships with all these listed indicators. Therefore, this study proposes to close this gap in the literature. To capture the long run effects, we used ARDL, Fully Modified Ordinary Least Squares, and Dynamic Ordinary Least Squares estimator approaches. Findings uncover that (a) a long run equilibrium relationship exists between credit market development and economic growth, (b) economic policy makers are required to seek after developing the credit market with the main intention of guaranteeing that banks and other money related establishments are enabled and empowered to give the essential funds to the beneficial part of the economy which are urban and private sectors. [ABSTRACT FROM AUTHOR]

The article discusses the low inward foreign direct investment (FDI) in Japan after taking into account its size and geographical or cultural distance from potential investors. Topics discussed include an empirical assessment of the impact of Abenomics on Japan's ability to attract inward, the gains for Japan from investment in its sluggish service sector, and a disconnect between the conditions amenable to policy intervention.

The author examines the effects of local preferences and internal boundaries. It notes that individuals from different cultural backgrounds might have more difficulty in realizing mutually beneficial exchanges due to barriers in language, customs, beliefs or other related reasons. It adds that language differences between trading partners can give rise to barriers to communication.

The present study estimates the causal effect of a process of political change, namely, a recent constitutional referendum, on economic growth in Myanmar. To analyze the impact of this process, this study compares the trajectories of actual and counterfactual GDP per capita after the referendum using the synthetic control method. We calculate the counterfactual GDP per capita using country‐level panel data from 2002 to 2013, with Myanmar as the treated country and a set of developing countries in East and South Asia, the Pacific and sub‐Saharan Africa as the control group. The results of the synthetic analysis suggest that the recent process of political change in Myanmar had a positive and significant effect on GDP per capita but not on per capita foreign direct investment or trade. [ABSTRACT FROM AUTHOR]

This article examines the influence of quality-adjusted educational attainment on growth and tests whether it facilitates the transfer of technology developed at the frontier for a panel of 60 countries. Using outcomes of pathogen stress as instruments, the results show that quality-adjusted educational attainment and its interaction with distance to the frontier play important roles for growth. (JEL I20, O30, O40 ) [ABSTRACT FROM AUTHOR]

The article discusses the transmission of the financial assistance of the European Union and other donors into direct budget support for Cape Verde. This trend provides the government with more opportunities to work on immediate action for the country. The author stresses that the altered gross domestic product (GDP) estimate reflects the achievement of the government's target of reaching double-digit growth by 2011. He also highlights the contribution of tourist-related foreign investment as well as strong domestic demand on the country's sudden change on its economic condition.

This article operates at the interface of the literature on the impact of foreign direct investment (FDI) on host countries and the literature on the determinants of institutional quality. We argue that FDI contributes to economic development by improving institutional quality in the host country. This proposition is tested within a large panel data set of 70 developing countries for the period 1981-2005. We show that FDI inflows have a positive and highly significant impact on property rights. Results are very robust and not affected by model specification, different control variables, or estimation technique. To our knowledge this is the first article to empirically test the FDI-property rights linkage. ( JEL F23, O43, P48) [ABSTRACT FROM AUTHOR]

We analyse the Granger causal relationships between foreign direct investment (FDI) and GDP in a sample of 31 developing countries covering 31 years. Using estimators for heterogeneous panel data we find bi-directional causality between the FDI-to-GDP ratio and the level of GDP. FDI has a lasting impact on GDP, while GDP has no long-run impact on the FDI-to-GDP ratio. In that sense FDI causes growth. Furthermore, in a model for GDP and FDI as a fraction of gross capital formation (GCF) we also find long-run effects from FDI to GDP. This finding may be interpreted as evidence in favour of the hypotheses that FDI has an impact on GDP via knowledge transfers and adoption of new technology. [ABSTRACT FROM AUTHOR]