The Past, Present, and Future of FDI: Towards a better Global Economics
We document past, present, and future of FDI trend in recent decades that goes substantially beyond the advanced economies. This rigorous study also examines the influence of FDI on economic growth using macro variables for a global perspective. Six macro variables namely, FDI, physical capital, trade, human capital, labor force, and infrastructure were used in this study. We did a panel analysis on data from 2002 to 2017 and used rigorous two-way fixed effect model. This study finds that both FDI and trade openness enhance economic growth. Open door policies are more beneficial for the entire world; capital also plays a significant role in this process. Further, FDI plays a role with human capital but vocational training, skilled labor force and education are the most important factors to attract FDI. In the last decade, overall sub-Saharan African, EU and Central Asia, Latin America and Caribbean regions have observed a significant economic growth through FDI. The future of FDI in a high populated area is very gleaming. The overall result indicates that FDI accelerates economic growth in the globe.
Agrawal, P. (2000). Economic growth impact of foreign direct investment in South Asia (Working Paper no. 117). World Bank, Retrieved from https://openknowledge.worldbank.org/bitstream/handle/10986/15082/9780821354100.pdf;seq#page=129.
Akinlo, A. E. (2004). Foreign direct investment and growth in Nigeria: An empirical investigation. Journal of Policy Modeling, 26(5), 627-639. https://doi.org/10.1016/j.jpolmod.2004.04.011.
Alfaro, L. (2003). Foreign direct investment and growth: Does the sector matter. Harvard Business School, 1-31. Retrieved from https://www.researchgate.net/profile/Laura_Alfaro/publication/228966060_Foreign_Direct_Investment_and_Growth_does_the_sector_matter/links/547c55be0cf2a961e48a01e4.pdf.
Alvarado, R, Iniguezb, M., & Poncea, P. (2017). Foreign direct investment and economic growth in Latin America. Economic Analysis and Policy, 56(2017), 176–187. https://doi.org/0.1016/j.eap.2017.09.006
Balasubramanyam, V.N., Salisu, M. & Sapsford, D. (1996). Foreign direct investmentand conomic growth in EP and IS countries. The Economic Journal, 106(434), 92-105. https://doi.org/10.2307/2234933.
Barro, R. J., & Sala-I-Martin (1997). Technological diffusion, convergence and growth. Journal of Economic Growth, 2(1), 1-26.
Basu, P., Chakraborty, C. & Reagle, D. (2003). Liberalization, FDI, and growth in developing countries: A panel cointegration approach. Economic Inquiry, 41(3), 510-516. https://doi.org/10.1093/ei/cbg024.
Borensztein, E., De Gregorio, J.,& Lee, J-W. (1998). How does foreign direct investment affect economic growth. Journal of International Economics, 45(1), 115-135. https://doi.org/10.1016/S0022-1996(97)00033-0.
Chee,Y. L., & Nair, M. (2010). The impact of FDI and financial sector development on economic growth: Empirical evidence from Asia and Oceania. International Journal of Economics and Finance, 2(2), 107-119.
Combes, J., Kinda, T., Ouedraogo, R., & Plane, P. (2019). Financial flows and economic growth in developing countries. Economic Modelling, 1-43. Retrieved from https://ideas.repec.org/p/hal/journl/hal-02074268.html.
De Long, B. & Summers, L. (1991). Equipment investment and economic growth. Quarterly Journal of Economics, 106(2), 445-502. https://doi.org/10.2307/2937944.
De Mello, L. R. (1999). Foreign direct investment in developing countries and economic growth: A selective survey. The Journal of Development Studies, 34(1), 1-34. https://doi.org/10.1080/00220389708422501.
Driffield, N., & Jones, C. (2013). Impact of FDI, ODA and migrant remittances on economic growth in developing countries: A systems approach. The European Journal of Development Research, 25(2), 173-196.
Hausman, J. A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251-1271. https://doi.org/ 10.2307/1913827.
Hoang, H. H., & Goujon, M. (2019). Determinants of intra-region and extra-region foreign direct investment inflow in ASEAN: A spatial econometric analysis. Applied Spatial Analysis and Policy, 1-18. https://doi.org/10.1007/s12061-018-9280-8.
Ilhan, O., & Huseyin, K. (2007). Foreign direct investment and growth: An empirical investigation based on cross-country comparison (MPRA Working Paper No. 9636). Retrieved from https://mpra.ub.uni-muenchen.de/9636/.
Jyun-Yi, W., & Chih-Chiang, H. (2008). Does foreign direct investment promote economic growth? Evidence from a threshold regression analysis. Economics Bulletin, 15(12), 1-10.
Khan, M. A., & Khan, A. S. (2011). Foreign direct investment and economic growth in Pakistan: A sectoral analysis. (Working Paper No 67). PIDE, Islamabad, Retrieved from http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-67.pdf.
Lucas, R. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3-42. https://doi.org/10.1016/0304-3932(88)90168-7.
Marx, K (1867). Capital (1st Eds.), London: Penguin.
Mele, M, & Quarto (2017). A gravitational model for estimate the determinants of outward foreign direct investment of China. International Journal of Economics and Financial Issues, 7(1), 1-5.
Mortaza, M. G., & Narayan, C. D. (2007). Foreign direct investment, trade liberalization and economic growth: Empirical evidence from South Asia and implications for Bangladesh (Policy Analysis Unit Working Paper Series No. WP0712), Bangladesh Bank, Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1111/1468-0084.00214.
Nair-Reichert, U., & Weinhold, D. (2001). Causality tests for cross-country panels: A new look on FDI and economic growth in developing countries. Oxford Bulletin of Economics and Statistics, 63(2), 153-171.
Omri, A., & Sassi-Tmar, A. (2013). Linking FDI inflows to economic growth in North African countries. Journal of the Knowledge Economy, 6(1), 90-104. https://doi.org/10.1007/s13132-013-0172-5.
Romer, P. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002-1037.
Saidi, K., Mbarek, M. B., & Amamri, M. (2015). Causal dynamics between energy consumption, ICT, FDI, and economic growth: Case study of 13 MENA countries. Journal of the Knowledge Economy, 9(1), 228-238. https://doi.org/10.1007/s13132-015-0337-5.
Sattar, Z. (1999). FDI in Bangladesh: Issues of long-run sustainability, Washington, DC: World Bank
Schutz, E. (2001). Encyclopedia of political economy (1st Eds.), In Phillip O’Hara, Abingdon, United Kingdom: Routledge.
Serrasqueiro, Z., & Nunes, P. M. (2008). Determinants of capital structure: Comparison of empirical evidence from the use of different estimators. International Journal of Applied Economics, 5(1), 14-29.
Smith, A. (1776). An Inquiry into the nature and causes of the wealth of nations, London: Oxford University Press.
Sylwester, K. (2005). Foreign direct investment, growth, and income inequality in less developed countries. International Review of Applied Economics, 19(3), 289-300. https://doi.org/10.1080/02692170500119748.
Uddin, M., Chowdhury, A., Zafar, S., Shafique, S., & Liu, J. (2019). Institutional determinants of inward FDI: Evidence from Pakistan. International Business Review, 28(2), 344-358. https://doi.org/10.1016/j.ibusrev.2018.10.006.
Wooldridge, J. M. (2007). Econometric analysis of cross section and panel data (2nd Eds.), Cambridge, Massachusetts: The MIT Press.
Copyright (c) 2019 Sana Ullah, Ahmed Usman, Muhammad Imran
This work is licensed under a Creative Commons Attribution 4.0 International License.
UMT journals follow an open-access publishing policy and full text of all articles is available free, immediately upon acceptance. Articles are published and distributed under the terms of the CC BY-SA 4.0 International License. Thus, work submitted to UMT Journals implies that it is original, unpublished work of the authors; neither published previously nor accepted/under consideration for publication elsewhere. On acceptance of a manuscript for publication, a corresponding author on the behalf of all co-authors of the manuscript will sign and submit a completed Author Consent Form, and Copyright Form.
Authors will be responsible for any information written/informed/reported in the submitted manuscript. Although we do not require authors to submit the data collection documents and coded sheets used to do quantitative or qualitative analysis, we may request it at any time during the publication process, including after the article has been published. It is the author's responsibility to obtain signed permission from the copyright holder to use and reproduce text, illustrations, tables, etc., published previously in other journals, electronic or print media.
Conflict of interest statements will be published at the end of the article. If no conflict of interest exists, the following sentence will be used: "The authors declare no conflict of interest." Authors are required to disclose any sponsorship or funding received from any institution relating to their research. The editor(s) will determine what disclosures, if any, should be available to the readers.
Authors are not permitted to post the work on any website/blog/forum/board or at any other place, by any means, from the time such work is submitted to UMT journals until the final decision on the paper has been given to them. In case a paper is accepted for publication, the authors may not post the work in its entirety on any website/blog/forum/board or at any other place, by any means, till the paper is published in UMT Journals.
The authors may, however, post the title, authors’ names and their affiliations and abstract, with the following statement on the first page of the paper - "The manuscript has been accepted for publication in UMT Journals". After publication of the article, it may be posted anywhere with full journal citation included.
All articles published in UMT journals are open-access articles, published and distributed under the terms of the Creative Commons Attribution-ShareAlike 4.0 International License which permits remixing, transformation, or building upon the material, provided the original work is appropriately cited mentioning the authors and the publisher, as well as the produced work is distributed under the same license as the original.
In the future, UMT may reproduce printed copies of articles in any form. Without prejudice to the terms of the license given below, we retain the right to reproduce author's articles in this way.
Brief Summary Of The License Agreement
By submitting your research article(s) to UMT Journal(s), you agree to Creative Commons Attribution-ShareAlike 4.0 International License which states that:
Anyone is free:
o To copy and redistribute the material in any medium or format
o To remix, transform, or build upon the material for any purpose, even commercially
o The author and the publisher have been appropriately credited
o The link to the license is provided
o Indicated if any changes were made
o The material produced is distributed under the same license as the original
UMT supports a range of policies to benefit the authors, with respect to providing them with an e-print. E-prints are sent out automatically to the corresponding author of articles published ahead of print and in print issues. A link is provided allowing the author to download the article directly from the UMT website and forward the link to their co-authors.