Impact Of Foreign Capital Inflows Research Articles

Impact of Foreign Capital Inflow on Economic Growth in Nigeria

Impact of Foreign Capital Inflow on Economic Growth in Nigeria

Foreign Capital Inflows and Financial Development in Pakistan: A Linear and Nonlinear ARDL Analysis

Foreign capital inflows play a significant role in sustainable development of financial sector of any country. This study investigates the impact of foreign capital inflows (including remittances, foreign direct investment (FDI), foreign aid, and external debt) on the financial development of Pakistan. For empirical analysis, this study used linear and nonlinear autoregressive distribution lags (ARDL) techniques with time series data from 1972 to 2022. Findings reveal that FDI, workers’ remittances, and foreign aid support financial development, whereas external debt negatively impacts financial development. Moreover, there appear to be asymmetrical effects of FDI and external debt on the financial development in the long run which reduces to a nonlinear FDI-finance relationship in the short run. The outcomes of this study imply policies that encourage networks for FDI and remittances while discouraging external debt inflows to stabilize the financial sector.

Impact of foreign capital inflows on the economy of a host country through lenses of employment

Impact of foreign capital inflows on the economy of a host country through lenses of employment

The Moderating Role of Institutional Quality in the Relationship between Foreign Capital Inflows and Stock Market Development: A Panel Data Analysis

The study examines the impact of foreign capital inflows (FCI) on stock market development (SMD), with a specific focus on the moderating role of institutional quality (IQ). The study uses a panel dataset of 28 emerging economies for the period of 1998 to 2022. The findings reveal that both international remittances (REM) and foreign portfolio investment (FPI) have a significant positive impact on SMD. These findings imply that REM inflows enhance the availability of financial resources in the economy, promoting stock market growth and stability. Similarly, FPI increases market liquidity and fills the saving-investment gap in the host country, thereby increasing SMD. However, the results show that foreign direct investment (FDI) has a significant negative impact on SMD. This finding implies that FDI could negatively affect SMD in the host country due to the diversion of investments from the stock market to other business ventures, profit repatriation, and crowding-out effects on domestic investment by creating strong competition in the input market, making it difficult for listed domestic firms to operate. Moreover, the study reveals two unique and interesting findings. First, official development assistance (ODA) has a significant negative impact on SMD, suggesting that ODA reduces SMD due to the misallocation of resources due to aid conditions and economic instability, and the crowding-out effect on private investments. Second, IQ positively moderates the relationship between all forms of FCI and SMD in the sampled countries, implying that host countries with a good institutional framework and high IQ tend to experience high SMD.

Overseas Capital Streams and Economic Growth Nexus: Pragmatic Insights from Nepal

The objective of the present research is to ascertain the impact of foreign capital inflows, including grants, loans, remittances, and income from tourism, on the economic growth of Nepal. This study utilizes secondary data acquired from several Nepalese economic surveys and World Bank reports. The data consists of 35 data points spanning from the fiscal years 1987/88 to 2021/22. The link between foreign capital inflows and GDP growth in Nepal is examined using fundamental statistical approaches like quantile regression, trace and Max-Eigen cointegration tests, and descriptive statistics. The results show that Nepal's grants, debt, foreign remittances, tourism earnings, and GDP growth co-integrate over the long term. Notably, 80.5 percent of Nepal's GDP growth fluctuation is accredited to foreign grants, loans, remittances, and tourism income. While foreign loans and grants are not statistically significant in and of themselves to measure GDP growth, foreign remittances and tourism income are. For every percentage increase in the median value of remittance and tourism income, the GDP grows by 0.251 and 0.816 percent, respectively. More revenue from tourism than from remittances goes towards Nepal's economic growth. Legislators can, therefore, enact suitable measures to encourage the expansion of the tourism industry

Asymmetric Analysis of the Impact of Foreign Capital Inflows on Economic Growth in Nigeria

Foreign capital inflows remain volatile and their impact on economic growth remains uncertain due to persistent challenges relating to policy inconsistence insufficient infrastructure and fluctuations in Global oil price. The volatility of these inflows posed challenges, raises concern on their impact on economic growth. This study examined the impact of foreign capital inflows on economic growth in Nigeria from 1990 – 2023.The variables of interest are real gross domestic product (RGDP), foreign direct investment (FDI), remittance (REM) foreign portfolio investment (FPI) official development assistance (ODA) external debt (ED) government expenditure on health (GEH) and government expenditure on education (GEE).This study employed a Nonlinear Autoregressive Distributed lag (NARDL) model and Granger causality test. The finding from the NARDL model showed that Foreign Direct Investment, Remittances, Official Development Aid, External Debt, government expenditure on health, and government expenditure on education all exhibit substantial impacts, with positive changes in these variables associated with increased economic growth, and negative changes leading to decreased economic growth in both short and long run period. The finding further revealed significant asymmetric impacts between Foreign Direct Investment, Remittances, Official Development Aid, government expenditure on health, and government expenditure on education with exception of External debt in the short run .This study recommends that to unlock Nigeria’s full growth potential, policymakers should boost absorptive capacity of the economy through improve infrastructure, security, and legal frameworks to effectively utilize incoming capital and accelerate sustainable economic growth. Furthermore, prioritize health and education spending to develop a skilled and healthy workforce, ultimately boosting domestic activity and productivity.

Analyzing the Impact of Foreign Capital Inflows on Domestic Savings in Pakistan: A Comprehensive Time Series Investigation

This research delves into the ramifications of foreign capital inflows on domestic savings within the context of Pakistan. Utilizing annual time series data spanning from 1972 to 2022, this study employs the Auto Regressive Distributed Lag (ARDL) methodology alongside causality analysis. The findings underscore that factors such as labor force participation rate, gross fixed capital formation, deposit interest rate, foreign direct investment, trade, GDP growth, and foreign remittances exert a favorable influence on gross domestic savings over the long term. Conversely, variables encompassing age dependency, external debt stock, and net official development assistance exhibit a detrimental impact on gross domestic savings. Furthermore, the outcomes derived from the Granger causality test reveal the absence of causal relationships between foreign direct investment, remittances, trade, external debt, and gross domestic savings. Notably, unilateral causality is identified solely between net official development assistance and gross domestic savings.

Analyzing the Impact of Foreign Capital Inflows on Domestic Savings in Pakistan: A Comprehensive Time Series Investigation

This research delves into the ramifications of foreign capital inflows on domestic savings within the context of Pakistan. Utilizing annual time series data spanning from 1972 to 2022, this study employs the Auto Regressive Distributed Lag (ARDL) methodology alongside causality analysis. The findings underscore that factors such as labor force participation rate, gross fixed capital formation, deposit interest rate, foreign direct investment, trade, GDP growth, and foreign remittances exert a favorable influence on gross domestic savings over the long term. Conversely, variables encompassing age dependency, external debt stock, and net official development assistance exhibit a detrimental impact on gross domestic savings. Furthermore, the outcomes derived from the Granger causality test reveal the absence of causal relationships between foreign direct investment, remittances, trade, external debt, and gross domestic savings. Notably, unilateral causality is identified solely between net official development assistance and gross domestic savings.

Impact of Foreign Enterprises’ Capital Inflow on Urbanization Factors: Evidence from Northeastern Cities of China

This study investigates the impact of foreign capital inflow and the number of contracted foreign direct investment projects on urbanization. The study focused on the less-explored provinces of Liaoning, Jilin, and Heilongjiang, covering the period from 2007 to 2021. The definition of urbanization was expanded to include three elements: the urbanized labor force, emission and pollution levels, and the productivity of services in the economy. Most importantly, an urbanization index was generated to estimate the total effect of foreign capital investment on sustainable green urbanization. The analysis employs both random and fixed effects regression models, complemented by robustness checks using the generalized least squares (GLS) method. The findings indicate that while foreign capital investments contribute positively to labor urbanization and service productivity, they have a notably adverse impact on environmental quality in the examined cities. Moreover, our findings confirm an overall inverse relationship between foreign capital investment and the urbanization index: the negative impact is primarily driven by inadequate procedures for emissions control in the northeastern Chinese cities. In conclusion, this research provides insights and strategic recommendations for promoting sustainable green urbanization.

Impacts of FDI and Environmental Pollution in ASEAN Countries: The Role of Institutions

The study aims to examine the role of institutions in the relationship between foreign direct investment and environmental pollution in ASEAN countries from 2000 to 2019. With the General Moment method, the results show that foreign direct investment impacts increasing environmental pollution. At the same time, aspects of institutional quality such as the rule of law, government efficiency, political stability, quality regulations, and voice and accountability reduce environmental pollution. Furthermore, the study shows that institutional quality is essential in reducing the negative impact of foreign capital inflows on environmental pollution in ASEAN countries. From these results, the study recommends that ASEAN countries implement environmental protection plans when attracting foreign investment flows.

Analyzing the Impact of Foreign Capital Inflows and Political Economy on Economic Growth: An Application of Regime Switching Model

The goal of this study is to use the Markov Regime Model (MSM) to evaluate the impact of three important FCIs and the political economy on Pakistan’s economic growth. The current research used quarterly data from 2000 to 2020. The empirical results demonstrate that dictatorship contributes favorably to the high and low growth regime of the economy, while election time contributes positively to the expansion period and adversely in recession times of the economy. Results confirmed that external debt has a strong negative influence on economic growth in both the high and low-growth regimes. Remittances, FDI, and growth, on the other hand, have a positive and substantial link with economic growth. This research suggested that effective fiscal and monetary policies, as well as a suitable political environment, should be provided so that foreign investors would be enticed to invest in Pakistan.

Analyzing the Impact of Foreign Capital Inflows on the Current Account Balance in Developing Economies: A Panel Data Approach

This research has explored the effects of foreign capital inflows on the current account deficit in developing countries from 1995 to 2020. The study considers various factors such as import demand, export demand, foreign direct investment, foreign debt, economic growth, foreign remittances, and foreign reserves as independent variables. The analysis utilizes the panel autoregressive distributed lag approach to examine both the long-run and short-run relationships between the dependent and independent variables. Moreover, the study employs the Panel Granger causality test to evaluate the causal connections among the selected variables. The results indicate that import demand, foreign debt, and remittance inflows positively affect the current account deficit in developing countries. Conversely, export demand, foreign direct investment, economic growth, and foreign reserves have a negative impact on the current account deficit. Consequently, it is recommended that developing countries prioritize the augmentation of stable and substantial foreign reserves as a strategy to alleviate the level of the current account deficit.”

Foreign Aid and the Public Sector: A Model of Fiscal Behaviour in Pakistan

The main aim of this paper is to demonstrate the impact of foreign capital inflows on government’s fiscal behaviour in Pakistan. Government’s fiscal response is measured in terms of social, non-development, and development expenditures as well as revenues. This paper specifies and estimates a fiscal behaviour model for the period 1976–95. The threestage least squares results suggest that foreign capital flows into the public sector have strong positive impact on social and non-development expenditures and, in contrast to what the government and donor agencies believe, have little effect on development spending. In other words, proceeds from foreign loans and aid are largely consumed rather than invested productively. The results also reveal the strong substitutable interdependence between social and non-development expenditures. Furthermore, the finding clearly demonstrates that foreign assistance causes a strong shift of public domestic resources from development projects to non-development activities. In addition to the above, the results show that a large fraction of government revenues is used to finance social and non-development expenditures. The results also demonstrate that foreign assistance enhances taxation efforts of the Government of Pakistan.

Impact of Foreign Capital Inflows on Economic Development of Pakistan: A Disaggregated Approach

The central intent of this study is to locate the fallouts of Foreign Capital Inflows (FCI) on economic development. Influenced from Human Development Index (HDI), constructs of economic development are disaggregated in multiple models and the time series estimation is done while relied upon forty-two years data ranging from 1980 to 2021. For cointegration analyses, Bound Test and Autoregressive Distributed Lag (ARDL) are used. Findings proved positive effects of components of FCI on the indicators of HDI except foreign debt. As a suggestion, it is recommended to focus upon appropriate debt management policy to eradicate the harmful consequences of foreign debt and to improve institutions and infrastructure to maintain certain inflow of foreign financing.

Impact of Foreign Capital Inflow on a Selected Macroeconomic Variable in Nigeria 1990-2021

Impact of Foreign Capital Inflow on a Selected Macroeconomic Variable in Nigeria 1990-2021

Foreign capital inflows, trade openness and output performance in selected sub-Saharan African countries

This study empirically examined the dynamic impact of foreign capital inflows and trade openness on output performance and national productivity in 31 selected countries in sub-Saharan Africa (SSA) between 1985 and 2018. The study employed random effects and fixed effects models to estimate the coefficients. However, the results from the two models portray similar behaviors. Both estimates revealed a significant relationship between output performance and the independent variables. This suggests that the macroeconomic variables examined are good explanatory variables for analyzing the determinants of output performance and national productivity in the SSA region. The study further found that foreign capital inflows, trade openness and inflation rate have a positive and significant influence on output performance and national productivity. In contrast, exchange rate and interest rate exhibited a negative and significant relationship with such output performance. This result implies that policymakers in SSA countries must formulate policies that can successfully ensure trade openness and promote foreign capital inflows so as to stimulate national productivity and boost output performance in the region. Therefore, it can be concluded that foreign capital inflows and trade openness affect the industrial sector in contributing to output performance and national productivity in the SSA countries.

Foreign capital inflow and housing prices in a developing country: an advanced econometric enquiry

PurposeThe study is intended to find out the relationship between housing prices and the inflow of foreign capital in Pakistan. There is a shortage of housing units due to rising population and rural–urban migration since its inception; on the other hand, there is also a lack of housing finances. The urban sprawl has created the demand for housing units, but the supply of housing has not been increased up to the required level, the major reason is a deficiency of housing finances.Design/methodology/approachThe analysis was carried out from 1973 to 2018, on an annual, quarterly and monthly basis; the structural changes are captured by the Zivot–Andrews unit root test. Gregory–Hansen test is used for cointegration, the combined cointegration also validates the results. In addition, the rolling window is used to capture timely changes between data sets. Finally, wavelet analysis is used to prove volatility.FindingsThe rising prices of housing in the country is alarming; Pakistan is a developing country, and it is facing many problems along with a housing shortage. The domestic sources of housing finances are inadequate, so foreign funds are welcomed. The rolling window regression proves that domestic factors along with the foreign capital inflow affect housing prices positively, and the wavelet analysis finds out that foreign direct investment is more volatile than workers’ remittances in financing the housing market.Originality/valueThis is a pioneering study to find out the impact of foreign capital inflows on the housing prices in the economy of Pakistan. The inadequacy of housing finances from domestic sources attracted foreign funds financing this sector. This study has used new techniques like rolling window and wavelet transformation, such techniques have not been used before.

The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation

Abstract This study investigates the impact of foreign capital inflows on poverty in Vietnam, using annual time series data from 1990 to 2018. The study was motivated by the need to establish if burgeoning foreign capital inflows in Vietnam can support the poverty alleviation agenda. Foreign direct investment (FDI) and external debt were used as proxies for foreign capital inflows; and infant mortality rate, Human Development Index (HDI) and household consumption expenditure were used as poverty proxies. Using the autoregressive distributed lag (ARDL) approach, the study found foreign direct investment to reduce poverty in the short run and long run when household consumption expenditure was used as a poverty measure. However, the study found FDI to worsen poverty in the short run when infant mortality rate and HDI were used as poverty proxies. The study found external debt to have poverty mitigating effect in the short run regardless of the poverty measure used and in the long run only when household consumption expenditure was used as a poverty measure.

Inflationary Rate in Nigeria: Impact of Foreign Capital Inflows

As the prices of daily needs are aggravating in Nigeria, the value of the country’s currency (naira) is less appreciated on a daily basis, and this pose a threat to a good standard of living in Nigeria. Therefore, this study investigated the impact of foreign capital inflows on the persistent increase in inflation in Nigeria over the period of 1985 to 2019. The Autoregressive Distributed Lags was used to obtain the parameter estimates of the long run relationship between foreign capital inflows and inflation. By using the Forecast Error Variance Decomposition techniques, the cause-effect analysis of foreign capital inflows and inflation was determined. Results provide evidence of a long run relationship between the series. Results further indicate that inflation is sensitive to foreign capital inflows variables such as net official development assistance received and remittance inflows in Nigeria. Policies that reduce the negative impact on inflation are recommended in the body of the paper.

FOREIGN CAPITAL INFLOWS AND MANUFACTURING SECTOR GROWTH IN NIGERIA

The study examined the impact of foreign capital inflow on manufacturing sector growth in Nigeria using time series data from 1986 to 2019. The study specifically sought to examine the causal relationship between foreign capital inflows and the growth of the manufacturing sector in Nigeria in the long run The study employed the Autoregressive Distributed Lag (ARDL) estimation technique to account for the impact of foreign capital inflows on the manufacturing sector growth in Nigeria. The study utilized the Contribution of Manufacturing Sector to Gross Domestic Product (MGDP) as proxy for manufacturing sector growth. Manufacturing sector growth was the dependent variable while foreign direct investment (FDI), foreign portfolio investment (FPI) and foreign Aid (FOA) were the independent variables, and were regarded as proxies for foreign capital inflows. The study results revealed that foreign capital inflows through the FDI had a significant positive impact on contributions of the manufacturing sector to gross domestic product (GDP). The study also revealed that foreign capital inflows through the FPI had a significant positive impact on contributions of the manufacturing sector to the GDP. The study further revealed that foreign capital inflows through the FOA had a significant positive impact on contributions of the manufacturing sector to the GDP. Based on these findings, the study has recommended that the Nigerian government should promote foreign capital inflows through the FDI in order to achieve the desired level of manufacturing sector growth in the country’s economy in the long run. The government should also encourage foreign capital inflows through the FPI in order to attain the desired level of manufacturing sector growth in the Nigerian economy. Finally, the government should also support foreign capital inflows through the FOA in order to attain the desired level of manufacturing sector growth in the Nigerian economy in the long run.