Abstract
The aim of this study is to investigate the relationship between foreign direct investment and economic growth in seven emerging countries. Past empirical studies have failed to estimate the long run relationship between the variables in these countries, which has created a gap in the literature. Data was collected from the United Nations Conference on Trade and Development and World Bank Indicator from 1990 to 2017, and the Johansen Fisher Panel Cointegration and Pairwise Dumitrescu Hurlin Panel Causality Tests were utilised to address the objective of the study. Consequently, the empirical results show that FDI, GDP per capita, growth rate and economic growth have a long run equilibrium relationship. Also, there is an existence of one-way feedback which runs from FDI to economic growth. Based on these findings, this study recommends among others that the policy makers in the emerging countries should ensure the sustainability of the rate of economic growth and embark on more foreign investment-oriented policies that would catalyse further attraction of FDI inflows into their economies.
Highlights
In the past few decades, European countries were the popular destination of FDI inflows
UNCTAD investment report shows that some emerging economies such as China, Hong Kong, Singapore, Brazil, India and Russia occupied the top ladder of FDI inflows recipients in 2016
An attempt has been made to carry out empirical study about the long run equilibrium relationship between FDI, GDP per capita, growth rate and economic growth in seven newly emerging economies within the period of 1990 to 2017
Summary
In the past few decades, European countries were the popular destination of FDI inflows. The estimated aggregate FDI inflows between 1970 and 2017 in this economic block occupied 38% of global FDI inflows within those years which has Aderemi et al: Panel Cointegration and Granger Causality Approach to Foreign Direct Investment and Economic Growth in Some Selected Emerging Economies. Positioned the region to be the highest recipient of global FDI inflows in the last 47 years (UNCTADstat, 2018). UNCTAD investment report shows that some emerging economies such as China, Hong Kong, Singapore, Brazil, India and Russia occupied the top ladder of FDI inflows recipients in 2016. China, India, Brazil, Hong Kong, Singapore, Russia and South Africa have been selected for this study due to the similar macroeconomic indicators which these newly industrialised economies shared in the last decade. Whereas investment is one of the principal derivers of economic growth (Solow-Swan, 1956), it is worth of note that the traditional neoclassical models of growth which are a direct offshoot of the Harrod-Domar and Solow models emphasis the important role which investment plays in propelling the economic growth
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
