Impact Of Foreign Direct Investment Research Articles

Effect of energy consumption, foreign direct investment, and economic growth on greenhouse gas emissions in OPEC member states: evidence from panel data analysis

Our paper explores the impact of energy consumption, foreign direct investment, and economic expansion on greenhouse gas emissions in OPEC member states. A panel data of 12 out of 13 OPEC nations over the period 1983 to 2022 obtained from the World Development Indicators is used. The autoregressive distributed lag simulation was adopted to determine the correlation among the series. Our estimations unveil that economic growth in the member states contributes 7.47 per cent to greenhouse gas emissions for every 1 percent increase, trade flow tends to reduce greenhouse gas emissions by 0.37 per cent for every 1 percent rise. Though the impact of foreign direct investment on greenhouse gas emissions in the OPEC member states is negative, it is statistically insignificant. The positive association between energy consumption and greenhouse gas emissions emphasizes the need for OPEC countries to move to cleaner energy sources in order to reduce environmental damage. A proactive approach to investing in clean technology is critical for governments and companies in OPEC countries. This includes supporting research and development of renewable energy sources, encouraging the adoption of environmentally-safe practices in industry and fostering innovation to promote sustainable development. Strict environmental standards for industries that contribute significantly to greenhouse gas emissions should be adopted and enforced. This includes: Setting caps on emissions, advocating for cleaner production processes, and imposing penalties for non-compliance with environmental regulations. Sustainable practices should be encouraged through tax incentives, subsidies, and other financial mechanisms designed to incentivized companies to adopt environmentally friendly processes. The implications of these findings for policymakers and future studies are discussed.

Transformative Impacts of Chinese FDI: Catalyzing Technological Advancements and Economic Growth in Morocco

Foreign Direct Investment (FDI) plays a vital role in shaping the global economic landscape, driving growth, spurring technological innovation, and enhancing international competitiveness. This paper embarks on a deep dive into the multifaceted world of FDI, unraveling its core concepts, theoretical underpinnings, influencing factors, and profound economic impacts. Focusing on Morocco, the study traces the evolution and current status of FDI, showcasing the nation's strategic initiatives since the reform and opening up era aimed at magnetizing foreign investments. Through illuminating case studies of Chinese FDI in Morocco, the paper reveals the transformative effects on economic development, job creation, and technological transfer. The findings highlight the crucial need for optimizing the investment climate, boosting innovation capabilities, and fostering regional development to attract premium foreign investments and ensure long-term economic vitality.

The effect of foreign direct investment on economic growth in Afghanistan: an empirical insight

PurposeThis paper examines the impact of foreign direct investment (FDI) on the economic growth of Afghanistan over the period 1990 to 2019.Design/methodology/approachThis study uses an autoregressive distributed lag (ARDL) to measure FDI’s impact on economic growth and determine the short- vs long-run relationship.FindingsThe results show that the F-bound cointegration test confirms the long-run relationship among the variables. The long-run and short-run results reveal that foreign direct investment has a significant negative impact on economic growth in the long run. However, domestic investment and labour force have a significant and positive impact on economic growth in the long run. Moreover, the impact of trade openness on economic growth is insignificant in the long run, while it has a significant negative impact in the short run.Originality/valueIn this study, we contribute to this research area by analysing the function of FDI in economic growth from Afghanistan’s experience and perspectives. This is the first study empirically examining this relationship in Afghanistan while considering other selected macroeconomic indicators. This paper could greatly benefit policymakers in Afghanistan by guiding the formulation of FDI policies that would spur its economic growth and development.

Effect of Chinese outward FDI on youth unemployment in sub-Saharan Africa.

This paper investigates the effect of Chinese outward foreign direct investment (FDI) on youth unemployment in sub-Saharan Africa (SSA) by using a modified labour demand model to identify the investment sources that are helpful for reducing youth unemployment in the region. The model is applied to a panel of 42 countries for the period 2003-2021 using random-effect, and generalized method of moment (GMM) estimators for robustness check. Our results suggest that Chinese FDI has direct short-term reducing effect on youth unemployment in SSA. The direction of China's capital investment to infrastructure development and other labour-intensive activities leads to immediate reduction in youth unemployment. However, overtime, due to absence of linkages with domestic firms, and thus lack of demand effects, Chinese FDI becomes insignificant for employment creation. Our results also indicate that Other FDI does not lead to significant reduction in youth unemployment both currently and overtime. Our analysis gives partial support to the argument that the impact of Chinese FDI may differ from those of developed countries. Finally, we could not find evidence that the effect of FDI on employment depends on host country human capital and institutional quality. Several specifications of the empirical model are tested, and explanations are provided for the results. Policy implications are highlighted, especially the need to attract more job absorbing FDI and improve domestic absorptive capacity.

The Effect of Remittances on Economic Expansion and Poverty Reduction: Evidence from Pakistan

This study investigates the impact of remittances on economic growth and poverty reduction in Pakistan. The research aims to empirically examine the relationship between remittances, economic expansion and poverty reduction. Using data from 1980 to 2021, sourced from the World Bank, the study employs the Augmented Dickey-Fuller test to assess the stationarity of variables. The results indicate that all variables are stationary, using the Autoregressive Distributed Lag (ARDL) approach for analysis. The ARDL bound test confirms a long-term relationship between the variables. In the context of economic growth, the study finds that remittances have a positive and significant impact, with a 1% increase in remittances associated with a 0.26% rise in GDP. However, the study observes a negative impact of foreign direct investment on GDP. Regarding poverty reduction, the results suggest that remittances have a negative and insignificant effect on poverty, with a 1% increase associated with a 0.53% decrease in poverty. Granger causality tests reveal unidirectional causation between remittances and economic growth and between remittances and poverty. The findings underscore the importance of remittances in influencing economic growth and poverty reduction in Pakistan. Recommendations include policies to enhance remittances' positive impact on economic growth and poverty alleviation. The study's implications extend to policy recommendations, emphasizing the potential benefits of remittances in fostering economic growth and poverty reduction. Policymakers are encouraged to consider remittances' positive impact when formulating sustainable development strategies. Additionally, the research contributes to the existing literature by providing insights into the nuanced relationships among remittances, economic growth, and poverty alleviation in Pakistan.

The impact of foreign direct investment on exports in the kingdom of Saudi Arabia (an empirical study)

This study is considered one of the few studies that attempted to explore the relationship between exports and foreign direct investment in the Kingdom of Saudi Arabia. The study aims to determine the nature of the relationship between exports and foreign direct investment in the Kingdom of Saudi Arabia during the period between (1990–2023). Employing Ender’s methodology using cointegration and error correction model. The study also relies on data on Saudi exports and foreign direct investment inflows from the World Bank databases. The results indicate the existence of Cointegration between foreign direct investment (FDI) inflows and the Saudi exports in the period (1990–2023), as for the causal relationship between the two variables, the results showed the causal relation between exports and FDI inflows from the direction of exports only, which means that Saudi exports cause FDI inflows in Saudi Arabia, and the study recommends giving more incentives to attract foreign investors in different sector rather than oil sector, besides improving the logistical services which is vital to any investment attraction strategy.

Analysing FDI inflow effects on CO2 emissions: a comparative study of OECD and BRICS nations with PHH and PHE models

Purpose The purpose of this study is to explore the correlation between foreign direct investment (FDI) and carbon dioxide (CO2) emissions in emerging economies, with a particular emphasis on Brazil, Russia, India, China and South Africa (BRICS) countries along with 10 the Organization for Economic Cooperation and Development nations. Design/methodology/approach This study uses quantitative research methods and econometric analysis to investigate the relationship between FDI inflows and CO2 emissions in selected countries. Specifically, the research concentrates on assessing the impact of FDI on CO2 emissions within the BRICS countries. By examining data spanning from 2000 to 2003, the study aims to shed light on the interaction between economic integration and environmental sustainability dynamics on a global scale. Findings The results of this study highlight notable contributors to CO2 emissions within the BRICS countries, identifying Switzerland, Denmark and the UK as significant sources. These findings support the notion of a pollution haven, underscoring the influence of FDI in moulding environmental outcomes in developing economies. Research limitations/implications Drawing from the study’s outcomes, suggestions are put forth to foster sustainable development strategies. It is recommended that BRICS nations prioritize the attraction of environmentally aware FDI to bolster efforts aimed at mitigating environmental harm. Originality/value This study adds to the ongoing discussion surrounding sustainable development by offering a concentrated analysis of how FDI influences CO2 emissions within BRICS countries. Its novelty lies in questioning traditional assumptions about environmental accountability and emphasizing the necessity for cooperative endeavours between emerging and developed economies to effectively tackle global environmental issues.

The impact of foreign direct investment on economic growth in Oman: An analysis via SmartPLS approach

Foreign Direct Investment (FDI) has grown rapidly around the world. This is because many nations, particularly developing ones, consider Foreign Direct Investment as a vital component of their economic growth plans. This research investigates the relationship between FDI and economic growth in Oman. This is descriptive research that employs quantitative methodologies, with quantitative data gathered through secondary sources. Economic growth is the dependent variable in this study. The factors influencing foreign direct investment are often known as independent variables. In addition, this study used the net inflow and net outflow % of GDP to measure foreign direct investment and GDP growth annual % for measure economic growth. Where the real data was used, annual reports from "The World Bank" for the years 1974 to 2019. In addition, the data in this study was evaluated utilizing a Partial Least Square (PLS) technique and Structural Equation Modeling (SEM). This study discovered a positive association between FDI and economic growth in Oman. Furthermore, the findings suggested that FDI had an impact on economic growth. Foreign direct investment has a substantial impact on economic growth (GDP-Growth). However, the finding showed that FDI-Net-Inflows were insignificant in terms of GDP-Growth.

The Impact of Foreign Direct Investment on Economic Growth in Zambia: A Comprehensive Analysis

This study examines the relationship between economic growth, government consumption expenditure, gross national income (GNI) per capita, exports and foreign direct investment (FDI) in Zambia from 1994 to 2023. Using secondary data from the World Bank and regression analysis using Jamovi software, the study finds significant positive impacts of GNI per capita, exports and FDI on Zambia's GDP. The findings underscore the critical role of FDI in driving economic growth through technology transfer, managerial expertise and capital formation, while emphasising the importance of macroeconomic stability and diversified economic policies to maximise the benefits of FDI. The findings provide valuable insights for policymakers in formulating strategies to leverage FDI for sustainable economic growth in Zambia.

Examining the Interconnections among ICT, Education, and Unemployment Evidence from Selected Asian Economies

Purpose of the research: This study investigates the influence of education and information communication technology (ICT) on economic growth and development in selected Asian countries, with a focus on reducing unemployment rates. Design/methodology: Using the Generalized Method of Moments (GMM) technique, the research analyses the relationship between unemployment rates and key independent variables such as secondary education, ICT index, foreign direct investment (FDI), economic growth, and inflation. Results/findings: The findings highlight the significant impact of secondary education, ICT, FDI, economic growth, and inflation on reducing unemployment levels in the selected Asian countries. The study emphasizes the importance of government initiatives to provide free higher education and expand financial debt facilities to boost per capita income and stimulate economic growth. Practical Implications and Conclusions: The research underscores the critical role of education, ICT, and economic policies in addressing unemployment challenges and fostering sustainable development in Asian economies. It recommends prioritizing investments in education and technology infrastructure and implementing measures to enhance financial accessibility and ICT utilization to combat unemployment effectively.

Foreign Direct Investment and Income Inequality Nexus in Middle-Income Countries: Exploring the Role of Research and Development Expenditure

The study explored the role of Research and Development Expenditure in determining the linkages between foreign direct investment (FDI) and income inequality within middle-income countries. World development indicators were used as a source for panel secondary data from 1990-2023. Panel unit root analysis was employed for data stationarity. The Panel co-integration analysis using the Fully Modified Ordinary Least Square (FMOLS) technique was applied to obtain correlations among three core variables. The findings explain that co-integration exists between variables; all variables are stationary at the first difference level. The FMOLS model incorporates the impact of FDI on the income inequality index with control variables. The analysis suggests that FDI in middle-income countries may decrease income inequality. Increasing research and development expenditures can reduce income inequality by promoting innovation and reducing reliance on external funding.

Impact of Foreign Direct Investment, Productivity, and Growth on Indonesian Youth Unemployment

Unemployment is a consistent economic challenge faced by all countries. Indonesia, as a developing country, grapples with unemployment issues predominantly affecting young individuals. This research aims to examine the impact of Foreign Direct Investment (FDI), economic growth, and labor productivity on youth unemployment in Indonesia. Annual time series data from 1991 to 2022 were analyzed using Autoregressive Distributed Lag (ARDL) technique. The study reveals a significant negative relationship between economic growth and labor productivity with youth unemployment in the long term. Meanwhile, in the short term, FDI and labor productivity have a significant positive impact on youth unemployment. It is hoped that the Indonesia government will prioritize the creation of job opportunities for young domestic workers and provide training to enhance the quality of youth workforce in Indonesia

The role of foreign direct investment in solving electricity poverty in Brazil

This paper conducts an empirical analysis of the relationship between Foreign Direct Investments and electricity poverty in Brazil in the period 1992–2021. With the opening up of the Brazilian economy in the 1990s policy makers expected that foreign investment would contribute to the development of the Brazilian economy. The impact of Foreign Direct Investment in the electricity sector is, nonetheless, a topic with scarce literature. Therefore, the current work to fill this gap is justified. We adopt an autoregressive distributed lag (ARDL) approach to investigate the short and long-run relationship between these variables. Our main result is that Foreign Direct Investment has a negative impact on electricity consumption in Brazil. Additionally, Foreign Direct Investment has a negative impact in terms of electricity access, at the time of the occurrence of the investment, which is compensated the year after. Private investments, have on the other hand, impacted electricity consumption positively. An implication is the need for compensatory public policies that can increase access to electricity for the poorest populations.

Foreign Direct Investment and New Quality Productivity of Enterprises

Now China is opening up to the outside world at a high level. In the process of utilising foreign investment, it is significant to study how foreign direct investment (FDI) affects the formation of new quality productivity of enterprises in China. This paper examines the impact of FDI on new quality productivity of enterprises. Results using financial statement data of A-share listed companies and FDI level data of the cities where the companies are located from 2011 to 2020 show that FDI has a significant promotion effect on the enhancement of new quality productivity of enterprises. Further analysis reveals that the positive effect is generated through the channels of improving enterprise innovation ability and easing enterprise financing constraints, predominantly observed in non-state-owned enterprises. The test for moderating effect shows that a high degree of capital market openness has a significant positive effect on the formation of new quality productivity of enterprises influenced by FDI. The results of this paper provide a theoretical perspective of FDI for further research on the new quality productivity of enterprises.

The nexus between FDI and human development: non-linear evidence from South Asia

PurposeHuman development is critical for fostering economic growth and development. Given the importance of human development, this study examines the asymmetric impact of Foreign Direct Investment (FDI) on human development by decomposing total FDI into positive and negative shocks in five South Asian countries from 1990 to 2021.Design/methodology/approachThe study uses the panel Non-linear Autoregressive Distributive Lag model (NARDL) to examine asymmetric long and short-run effects of FDI. Further, the direction of causality between HDI and FDI is examined using the recently developed (Joudis et al., 2021) panel granger non-causality test.FindingsThe positive and negative FDI shocks positively impact HDI, but positive shocks have a higher effect than negative shocks in the long run. The Wald Test rejects the long-run symmetric effect, confirming the asymmetric relationship between FDI and human development. More importantly, causality results reveal the FDI-led HDI and HDI-led FDI development in South Asia.Practical implicationsFDI should be encouraged by formulating a well-tailored policy intervention. The development policies should be interlinked with FDI policies. Absorptive capacities such as infrastructure facilities, a threshold level of human capital, and institutions should be strengthened to attract higher FDI into high-tech sectors.Originality/valueUnlike the previous empirical studies, this study provides asymmetric evidence between FDI and human development in South Asia.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-05-2023-0380.

Foreign direct investment spillovers and regional innovation in China: The spatial moderating role of absorptive capacity

AbstractThis study examines the relationship between foreign direct investment (FDI) and regional innovation relationship in Chinese cities from 2009 to 2018, considering the influence of local absorptive capacity (ABC). We employ spatial panel regression moderated models with an interaction term between ABC and FDI. Our findings reveal spatial correlation and heterogeneity in the impact of FDI on regional innovation. Across various ABC percentile points, both direct and indirect effects of FDI are significantly negative. However, incorporating the moderating variable ABC weakens the detrimental effect, and as ABC increases, the inhibitory effect dissipates, resulting in a positive impact on regional innovation.

How Does Foreign Direct Investment Impact the Sustainable Development? Empirical Evidence from China’s Coastal Areas

As one of the important driving forces of sustainable development in coastal areas, foreign direct investment (FDI) has provided new ideas for exploring optimal strategies. This analysis explores the linear impact of FDI on sustainable development in coastal areas with 53 cities in China from 2012 to 2020. Accordingly, a dynamic panel smoothed transition regression (PSTR) model is used to analyze the non-linear impact of FDI on sustainable development, with transition mechanisms of industrial structure and technological innovation level. The findings reveal that the non-linear effect of FDI on the sustainable development of coastal areas is obvious. When the coastal area’s industrial structure is more optimized, and the level of technological innovation is higher, the promotion effect of FDI on sustainable development is more obvious. Further, the threshold effect of industrial structure and technological innovation is different. The threshold conversion rate of industrial structure is faster, but the threshold effect of technological innovation is stronger. Regionally, the impact of FDI on the sustainable development of coastal adjacent areas is significant, but not on the sustainable development of inland areas due to the few FDI inflows. This analysis offers guidance for policymakers to further develop the tertiary industry, increase financial investment in innovation in coastal areas and encourage enterprises to improve their independent innovation capacity.

Do foreign direct investment and foreign aid accelerate economic growth in developing countries?

PurposeThis paper aims to study the impact of foreign direct investment (FDI) and official development assistance (ODA) on the economic growth of developing countries. This paper classifies sample countries into two groups (low- and high-income developing countries) based on income level and investigates whether the two sources of foreign capital have different effects on the economic development of each subgroup of countries.Design/methodology/approachThe authors analyze panel data on 93 countries from 1981 to 2020 using a two-stage least squares (2SLS) estimation. The 2SLS method is used to overcome the endogeneity problem between economic growth and FDI. The sources of the data are World Bank and OECD.FindingsFirst, FDI inflows tend to accelerate per capita GDP growth in both total sample countries and within both groups of countries. Second, ODA has a significant impact on per capita GDP growth only for low-income developing countries. This result indicates that ODA seems to be particularly important for low-income developing countries.Practical implicationsThis paper suggests policy implications that low-income developing countries should create an environment for more ODA funds to flow into themselves with efforts such as improving the credibility and effectiveness of the government related to ODA programs. It also provides implications for donors of ODA to focus their ODA resources on low-income developing countries to more effectively achieve the goal of helping developing countries’ economic growth.Originality/valueThis paper investigates whether FDI and ODA have different effects on the economic development of low- and high-income developing countries. To the best of authors’ knowledge, this point is not addressed in existing studies.

Do Investments Have an Impact on Reducing Poverty? ARDL Approach

Purpose: The purpose of this research is to examine the impact of foreign direct investments (FDI) and gross fixed capital formations (GFC) on poverty reduction in Türkiye. Design/Methodology: In this study, which analyzes the impact of investments on poverty, two different models were established. The models constructed using 1982-2020 annual data were analyzed with the ARDL method. Findings: As a result of the analysis, both foreign direct investments and gross fixed capital formations have positive (poverty reducing) effects on poverty reduction in Türkiye. Gross fixed capital formations are more effective in reducing poverty than foreign direct investments. Limitations: The number of poor people in Türkiye is accessed discretely. This situation has led to a limited number of empirical studies in the field of economics in Türkiye that use time series analyses related to poverty. In this study, this constraint is overcome by using household final consumption expenditures per capita (HFC) as a proxy variable as in the literature. Originality/Value: In this study, two separate models were established with foreign direct investments and gross fixed capital formations as independent variables. The comparison of the impact of these two types of investment variables on poverty in Türkiye reveals the originality of this study.

The Impact of Foreign Direct Investment on Economic Growth in Jordan: A Study of the Period 1978-2021

Objective: This paper aims to measure the impact of foreign direct investment on economic growth in Jordan during the period (1978-2021), based on a set of standard tests that will help clarify the relation between the variables of the study. Theoretical Framework: This paper proposes to examine the benefits of an open market economy based on trade and investment liberalization. The focus will be on factors that attract foreign direct investment, such as improving GDP, infrastructure, and political stability. These factors significantly impact employment rates, technology transfer, export development, and balance of payments. Method: The study used Eviews-9 to estimate a suitable linear model. A unit root test using ADF methodology indicated stationary variables at I(0) level. The Johansen methodology was used to perform a joint integration test, which showed that the two variables were complementary according to the Trace Test and Maximum Eigenvalue. Results and Discussion: After estimating the results of the equation using the Ordinary Least Squares regression (OLS), the results indicate that if the percentage of foreign direct investment increases by 1%, the GDP increases by 0.05%. All transactions are statistically significant at a level less than (0.01). R2 also indicates that FDI explains 18% of changes in GDP. Research Implications: Foreign direct investment is crucial for developing countries like Jordan, as it helps increase cash flows. Jordan strives to create favorable laws to attract more investments. Originality/Value: The study compared Jordan's case with previous studies and found similarities and differences. Jordan's political, security, and geographical situation, along with continuous development of investment-related legislation, made it more fortunate than others.