Foreign Direct Investment Response to Monetary Policy Tools Fluctuations in Tanzania

Foreign direct investment (FDI) inflows are regularly seen as an important catalyst for economic growth in developing countries. The study objectives are to analyze the current status of Foreign Direct Investment and Economic Development in India and to determine the impact of Foreign Direct Investment and Macro Economic Factors. The study has been used data from 2000-01 to 2018-19 by using Augmented Dickey-Fuller (ADF) and Auto-Regressive Distributive Lag (ARDL) the results have been estimated. The study results indicate the positives relationship can be a result of sufficient foreign direct investment invest in India's economy which has been able to exert sufficient consequence to make it develop the economy.

This study investigates the relationship between external debt stock, foreign direct investment (FDI), and economic growth in Tanzania to assess their dynamic effects and causal linkages from 1970 to 2023. The motivation stems from the critical role that external capital flows play in supporting Tanzania's economic development, particularly in rising debt levels and efforts to attract foreign direct investment. Using annual time series data, the study employs the Autoregressive Distributed Lag (ARDL) model to capture short-run and long-run dynamics, following stationarity confirmation through the Augmented Dickey-Fuller (ADF) test. The Bounds test results indicate no evidence of a long-run equilibrium relationship among the variables. However, the Granger causality analysis reveals that foreign direct investment (FDI) significantly influences economic growth and external debt, while no causal relationship between external debt and GDP has been detected. The findings suggest that external debt has a significant short-term positive impact on economic growth, while FDI consistently exerts a positive and significant effect. These results highlight the importance of promoting productive foreign investment and ensuring effective utilization of external borrowing to support sustainable economic growth. Policymakers are encouraged to prioritize FDI

PurposeThe purpose of this paper is to find out empirically the relationship between foreign direct investment (FDI) and economic growth and it will also highlight the relationship status between the variables included in the model, either long‐ or short‐run in case of China.Design/methodology/approachThis study uses secondary data obtained from World Development Indicators over the period 1985‐2009, whose viability has also been checked through the World Bank and IFS. An Augmented Dickey‐Fuller (ADF) unit root test is used to estimate an autoregressive distributive lag (ARDL) approach to co‐integration as the variables in the model are in I(1) and I(0) form and the Schwarz Bayesian Criterion (SBC) is used in this study to find out the estimated lags of the model, which are ultimately used to find out the short‐ and long‐run relationship of the variables included in the model. The error correction model (ECM) was also applied which basically provides information about the causal factors that may affect the variables included in the model.FindingsThe results provide evidence that there is an empirical relationship among FDI and economic growth. The computed value of F‐statistics is greater than the upper bond value described by Pesaran, M.H. et al., which depicts evidence against the null hypothesis of no effect and hence long‐run relationship among the variables is concluded at bottom line. Empirical evidence reveals that FDI has a positive effect on economic growth. An error correction model (ECM) is applied and the error correction term was negative and significant. This indicates that there exists a relationship between the variables. Diagnostic tests showed a lack of heteroscedisticity, confirming the validity of the model; CUSUM and CUSUMSQ tests were used to reveal the model's stability.Practical implicationsThe Government of China should keep keen emphasis on the ingredients of this study so that China could reap maximum share of FDI through the achievement of positive spillovers of foreign investment, which ultimately results in its economic growth. However, the ingredients of this study depict the expenditures on security status, growth options as well as on infrastructure. This study also gives better impending in decision making about FDI in case of China.Originality/valueThis study bridges the gap between theory and practice and proves empirically the relationship between FDI and economic growth through auto regressive distributive lag approach (ARDL) to co‐integration in case of China. This research includes most dominating factors in the model which differentiate it from all previous empirical researches related to FDI's relationship with economic growth. However, this study not only pin points the new dominating factors related to this kind of relationship, but also set up a new horizon in the field of research to get groundbreaking results – in case of other countries – by following the footings set by this research.

Foreign Direct Investment (FDI) plays a vital role in driving economic growth, yet its responsiveness to monetary policy instruments remains underexplored in Tanzania. This study examines the relationship between FDI and monetary policy tools using annual time series data from 1960 to 2023, sourced from the World Bank and the Bank of Tanzania. Guided by the Interest Rate Parity theory, the study employs Autoregressive Distributed Lag (ARDL) and Vector Autoregressive (VAR) models, along with Granger causality tests, to capture both short-run dynamics and causal interactions. Based on 64 observations, the study reveals average values of 48.07% for income from the Treasury Account, 12.1% for the discount rate, and TZS 14,040.99 billion for reserves. Unit root tests confirm that most variables are integrated of order one, I(1). ARDL results show that previous FDI levels and the discount rate (β = 0.90, p = 0.0041) significantly predict current FDI inflows, while reserves and Treasury yields have statistically insignificant effects. Granger causality analysis indicates a bidirectional relationship between FDI and the discount rate, and a unidirectional link from FDI to reserves. Diagnostic tests confirm model reliability and stability, with no serial correlation or heteroskedasticity. The study recommends that monetary authorities adopt interest rate policies that stimulate borrowing and investment, fostering a more favorable environment for sustained economic growth.

Background: Foreign direct investment (FDI) is a steadfast contributor to capital flows and plays an indispensable role in driving economic advancement and emerging as a pivotal avenue for financing growth in Bangladesh. Therefore, this study identifies the factors that influence FDI inflows in Bangladesh. Moreover, the authors explored the more appropriate model for predicting FDI by comparing the efficacy of other models' predictions. Methods: This study is based on secondary data over the period 1973 to 2021 and collected from the publicly accessible website of the World Bank. A generalized additive model (GAM) was implemented for describing the proper splines. The model's performance was assessed using the modified R-squared, the Bayesian information criterion (BIC), and the Akaike information criterion (AIC). Results: Findings depict a significant nonlinear relationship between Bangladesh's FDI and key economic indicators, including GDP, trade openness, external debt, gross capital formation, gross national income (GNI) and government rates of exchange, total reserves, and total natural resource rent. It is also observed that the GAM (R 2 = 0.987, AIC = 608.03, and BIC = 658.28) outperforms multiple linear regressions and polynomial regression in predicting FDI, emphasizing the superiority of GAM in capturing complex relationships and improving predictive accuracy. Conclusion: A nonlinear relationship is observed between FDI along with the covariates considered in this study. The authors believed that this study's findings would assist in taking efficient initiatives for FDI management and proactive economic indicator optimization to empower Bangladesh's economic resilience and foster sustainable growth. The analysis revealed that FDI and its related risk factors follow a nonlinear pattern. The study recommends using the GAM regression as a reliable method for predicting FDI in Bangladesh. The authors suggest that the findings can guide policymakers in developing strategies to increase FDI inflows, stimulate economic growth, and ensure sustainable economic development in Bangladesh.

Countries are increasingly focused on attracting Foreign Direct Investment (FDI) and are offering various benefits to foreign investors. FDI has become a global trend, and this study investigates the impact of exchange rate volatility on FDI in Pakistan using data from 1992 to 2022 using FDI, exchange rate, exchange rate volatility, consumer price index (CPI) and trade openness. The study employed unit root testing to assess the stationarity of the variables, followed by the Autoregressive Distributed Lag (ARDL) technique to examine the long-term impacts. The results indicate that trade openness and the Consumer Price Index (CPI) have significant effects, while other variables show insignificant impacts on FDI. Exchange rate volatility, CPI, and trade openness negatively impact FDI, while the exchange rate positively affects it in the long run. The negative coefficient for exchange rate volatility suggests that frequent changes in the exchange rate discourage FDI inflows. Thus, the government of Pakistan should implement policies to stabilize the frequently changing exchange rate.

This study aims to determine the effect of the rupiah exchange rate, economic growth, inflation rates and interest rates on foreign direct investment. this study use quantitative methods. The samples in this study are the value of the foreign direct investment net inflow, the official exchange rate, the gross domestic product per capita, the consumer price index and the lending interest rate in Indonesia in the period 1994-2019. The data used in this study are secondary data obtained from the World Bank website. Data processing and analysis techniques used are the descriptive statistics analysis, the multiple linear regression, the classic assumption tests, the correlation coefficient analysis, and the hypothesis testing. The results showed that the rupiah exchange rate partially had a negative and significant effect on the foreign direct investment, the economic growth had a positive and significant effect on the foreign direct investment, the inflation rate had a positive and significant effect on the foreign direct investment and the interest rate had a negative influence and significant impact on the foreign direct investment against foreign direct investment. Simultaneously, the Rupiah exchange rate, economic growth, inflation, and interest rates have a significant influence on the foreign direct investment in Indonesia

Purposes: The last four decades, the value of foreign direct investment (FDI) inflow in Somalia has fluctuated between $339,000,000 in 2016 and $43,390,000 in 1970. Thus, this research investigated the factors influencing foreign direct investment (FDI) inflows in Somalia. Over the period from 1980-2017 and data are obtained from the World Bank. Design/ Methodology/ approach: this study used The Vector Auto regression (VAR) model. The econometric methodology to be utilized includes the unit root test for used Augmented Dickey-Fuller (ADF), co-integration test, Johansen integration test and diagnostic test includes serial correlation, normality, heteroskedasticity and AR root test. Furthermore, they are also utilized for VAR Granger causality tests. Findings: The findings of this paper indicated unit root test showed that all variables except external debt are not stationary at the level but become stationary after first differencing at the 10% level of significant. The co-integration test indicates the relationships between variables are integrated. The Granger-causality test shows only one-way Granger-causality relationships from FDI to GDP, import and export variables or so-called unidirectional Granger causality. Moreover, impulse response function indicates results all variables are positive related in the short run and long run except for imports which is negative related with FDI. Although, GDP, imports and inflation are significant to FDI, but export and external debt are insignificant to FDI. Therefore, this research concludes that FDI influences economic growth in Somalia. Research limitations/ implications: Although this research has expended and evolved prior studied various respects, a comprehensive and systematic time-series study on FDI and its determinants in Somalia would involve more capitals than had been made available for this study. There are still a number of specific constrains to be noted on the investigating FDI and its determinants in this paper, some factors such as political and macroeconomic instability, human capital, infrastructure and corruptions are not considered owing to data availability. Moreover, it’s recommended that future studies could improvement widely and update research in FDI.

What determines foreign direct investment inflows has been a subject of controversy among scholars. As a result of the highlighted gap discussed in this study, the short and long run determinants of foreign direct investment and their effects on foreign direct investment inflow in Nigeria was investigated from 1986 to 2018. Data were analyzed with Augmented Dickey-Fuller and Phillips Perron unit root test, Autoregressive Distributed Lag and Pairwise Granger Causality techniques. Evidence of long run dynamic equilibrium relationship was established between foreign direct investment and its determinants. The short and long run coefficients revealed that government capital expenditure and inflation impede the inflow of foreign direct investment both in the short and long run while exchange rates serve as a bane to foreign direct investment in the long run. However, gross domestic product and trade openness were found to stimulate the inflow of foreign direct investment in the short and long run. The Pairwise causality result revealed that government capital expenditure, exchange rate and trade openness had independent causality with foreign direct investment while gross domestic product and inflation rate had unidirectional causality with foreign direct investment. Thus, the government should allocate more funds for the provision of enabling and investment enhancing the environment to promote foreign direct investment inflow. The study added value to previous studies by estimating the short and long run determinants of foreign direct investment using the more dynamic and robust technique of Autoregressive Distributed Lag developed by Peseran and Shin (1999).

PurposeThe aim is to examine the long run and short run linear and non-linear impact of foreign direct investment (FDI) inflows on poverty in Nigeria from 1980 to 2019.Design/methodology/approachThe Augmented Dickey Fuller, Phillips Perron and Kwiatkowski-Phillips-Schmidt-Shin unit root tests and bounds test were used to tests the series stationarity and co-integration, respectively. Autoregressive Distributive Lag (ARDL) and non-linear and linear autoregressive Distributive Lag (NARDL) estimators are employed to examine the long run and short run impact of the coefficients of the variables and diagnostic check.FindingsThe study finds that the variables are integrated at a level I(0) and the first difference I(I) and co-integrated. The ARDL estimator indicates that FDI significantly reduces poverty in the long and short run. The findings under NARDL shows FDI positive shock and FDI negative shock reduces poverty substantially in the long-short run, respectively. The error correction term is negative and significant.Research limitations/implicationsThis study is limited to a single country (time series) and less informative compared with the panel data study with much informative and free from hetero-scedasticity. Future studies should consider panel data using a similar or dissimilar approach.Practical implicationsFDI inflows stimulate growth, thereby creating job openings, transfer of modern technology and reduce poverty and demonstrate that, if the finding integrated into policy actions, the government would attract FDI inflows for the real sector of the economy.Social implicationsFDI inflows lead to environmental degradation if inferior technology is use in the host economy, especially the weak environmental regulations in Nigeria.Originality/valueThe authors find no study that applied both ARDL and NARDL estimator, selection of variables measurement and time frame for the study in the context of Nigeria.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2020-0530.

This article investigates whether or not inward foreign direct investment (FDI) leads to export performance in India over the time period 1980—2017. We use Augmented Dickey–Fuller and Phillip–Perron unit root test to check the stationarity, and it confirms that all the variables are stationary at first differences I(1). The auto regressive distributed lag (ARDL)-bound testing co-integration approach confirms that there is no valid long-run relationship between considered variables. Results indicate the insignificant negative impacts of FDI on real exports in long run but not in short run. Result of Granger causality test confirms that there is a unidirectional causal relationship existing between the variables where FDI has a Granger cause to export. Results of stability test suggest that there is no structural instability in the residuals of equation of real exports. FDI does not work uniformly in all sectors, and policymakers should understand the difference and identify their sector-wise policies relating with FDI. The law and order should also be maintained, which is the essential part to attract the foreign investors. At this stage, we can also set the direction of future research, that is, sector-wise study should be done on the relationship between FDI and exports.

This study investigates how Nigerian employment is impacted by changes in population dynamics and price movements. How the influence of price volatility and price expectations in the rate of inflation as a key measures of the general price level. The investigation used an estimating technique called the autoregressive distributive lag (ARDL) model to assess the long- and short-term relationships between population dynamics, employment as measured by labor, and price fluctuations as proxy by the consumer price index. The dependent variable in the model is labor force, which is a proxy for employment, while the regress variables are the consumer price index, foreign direct investment, population growth rate, and tax revenue. Additionally, the ADRL bound test verified that there isn’t actually a long-term association. While the Augmented Dickey Fuller unit root cointegration test verified variables are stationary at level and at first difference, there is a correlation between employment, as measured by the labor force, price changes, as measured by the consumer price index, foreign direct investment, population growth rate, and tax revenue. The study’s findings indicate that price rises, as determined by the consumer price index, have a short- and long-term marginally positive impact on employment. Additionally, the population has a short-term and minimal negative influence on jobs. In addition, the research recommends that the government implement measures to help slow down population growth in order to control the labor supply and, consequently, lower unemployment rates, also suggest a much symmetric inflation objectives that will improve the management of both fiscal and monetary policies inter-temporal sustainability in Nigeria .

Climate change is a global phenomenon but its implications are distinctively local. The climatic variables include temperature, rainfall, humidity, wind speed, cloud coverage, and bright sunshine. The study of behavior of the climatic variables is very important for understanding the future changes among the climatic variables and implementing important policies. The problem is how to study the past, present, and future behaviors of the climatic variables. The purpose of the present study was to develop an appropriate vector autoregression (VAR) model for forecasting monthly temperature, humidity, and cloud coverage of Rajshahi district in Bangladesh. The test for stationarity of the time series variables has been confirmed with augmented Dickey–Fuller, Phillips–Perron, and Kwiatkowski–Phillips–Schmidt–Shin tests. The endogenity among the variables was examined by F-statistic proposed by C.W.J. Granger. The order of the VAR model was selected using Akaike information criterion, Schwarz information criteria, Hannan–Quinn information criteria, final prediction error, and likelihood ratio test. The ordinary least square method was used to estimate the parameters of the model. The VAR(8) model was found to be the best. Structural analyses were performed using forecast error variance decomposition and impulse response function. These structural analyses divulged that the temperature, humidity, and cloud coverage would be interrelated and endogenous in future. Finally, temperature, humidity, and cloud coverage were forecasted from January 2011 to December 2016 using the best selected model VAR(8). The forecasted values showed an upward trend in temperature and humidity and downward trend in cloud coverage. Therefore, we must show our friendly behavior to the environment to control such trends.

This paper tries to evaluate the economic importance of foreign inflows in determining the real effective exchange rate. Monetary policy plays a substantial role in determining the stability of prices, trade and foreign inflows like foreign direct investment, personal remittances, and foreign aid. In this study, the causal relationship is analyzed among policy variables and control variables. The study used secondary time series data from 1960-to 2020. Augmented Dickey Fuller (ADF) and Philips Perron (PP) unit root tests are used to check the stationary of the variables. Results showed that all variables are stationary at the level I (0) and the first difference I (1). The auto regressive distributive lag (ARDL) approach and Granger Causality approach is discussed to find cointegration and causality respectively. ARDL Bound test reveals the cointegration existence among the variables. ARDL results suggest that foreign inflows (Foreign Direct Investment, Foreign Aid, Personal Remittances), Trade and Inflation showed a significant relationship with Real Effective Exchange Rate in the long run. Granger Causality suggested the existence of Causality among Foreign Aid and Real Effective Exchange Rate, Foreign Direct Investment and Foreign Aid, Trade and Remittances. The results of the study are found in contradiction with the law of one price.

<p>This paper analyses real Gross Domestic Product (GDP), Domestic Investment (DI), Foreign Direct Investment (FDI), Domestic Savings (DS) and Trade (TR) in Rwanda for the period 1970 to 2011. GDP and DI have an upward trend and annual growth of real GDP was around 8% in average for all period. FDI and DS have remained below 2% of GDP each and trade balance of Rwanda is always negative. Augmented Dickey-Fuller (ADF) tests show that GDP, DI and FDI are not stationary at the level but the first differences are stationary. VAR (1) was identified as the appropriate model according to Akaike information criterion, Schwarz information criterion and Hannan-Quinn information criterion. Granger causality tests show that there is bi-directional causality between GDP and TR and TR and DI and unidirectional causality from GDP to DI, from DS to GDP, from DS to DI and from DS to TR. These findings show that GDP can be used to promote Domestic Investment and Trade. Domestic savings have significant effects on GDP, DI and TR. VAR was estimated and the forecasted values of GDP, DI and FDI in 2011 are respectively, 3,843.6233 million, 22.67% and 0.95% while their actual values in 2011 are 3891.9million, 22.7% and 1.66%. There is under-prediction for GDP, DI and FDI. The differences can be explained by the efforts of the Government of Rwanda to promote GDP, Domestic Investment and Foreign Direct Investment.</p>