does foreign direct investment impede environmental quality in high middle and low income countries abstract under a multivariate framework this paper aims to investigate the nonlinear correlation between foreign direct investment and environmental degradation for high middle and low income countries with economic growth and energy consumption as additional determinants of environmental degradation all variables were found to be nonstationary and cointegrated based on recent panel data unit root tests and cointegration techniques on applying fully modified ordinary least squares fmols the long run results suggest the presence of an environmental kuznets curve in turn foreign direct investment increases environmental degradation thus confirming the pollution haven hypothesis phh moreover the bidirectional causality between co2 emissions and foreign direct investment is observed globally the findings are sensitive to different income groups and regional analyses in particular these empirical findings aid sound economic policymaking for improving environmental quality and sustainable economic development

absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth abstract this study examines the effects of foreign direct investment fdi and equity foreign portfolio investment efpi on economic growth using data on 80 countries from 1979 through 1998 the results largely suggest that lagged fdi and efpi do not have direct unmitigated positive effects on growth but some data are consistent with the view that the effects of fdi and efpi are contingent on the absorptive capacity of host countries with particular respect to financial or institutional development moreover extreme bound analysis eba of significant results indicates that the estimates are robust compared to other empirical studies on growth

causal relationships between energy consumption foreign direct investment and economic growth for mint evidence from panel dynamic ordinary least square models abstract this research examines the interactions between economic growth energy consumption and foreign direct investment among other factors using a panel dynamic ordinary least squares model for mexico indonesia nigeria and turkey mint because they are emerging economies have large population and favorable demography with high expectation for strong economic growth to make the analysis more homogenous these interactions were examined for individual country and as a group from 1990 to 2014 and coefficients of their long run economic growth function estimated there exist a bi directional causal relationships between economic growth energy consumption and fdi inflows for mexico a bi directional causal relationships between economic growth and energy consumption between economic growth and fdi inflows and an uni directional causal relationship from fdi to energy consumption for indonesia there also exist a bi directional causal relationships between economic growth and energy consumption between economic growth and fdi inflows and an uni directional causal relationship from fdi to energy consumption for nigeria while turkey had a bi directional causal relationships between economic growth energy consumption and fdi inflows global panel reveals that there exist a bi directional causal relationships between economic growth and energy consumption between economic growth and fdi inflows and an uni directional causal relationship from fdi to energy consumption diversification of economy to improve labor productivity is encouraged and over reliance on fossil fuel should be minimized

exchange rate regimes and fdi in developing countries a propensity score matching approach abstract theory suggests that regimes of relatively fixed exchange rates encourage inward foreign direct investment fdi relative to regimes of more flexible exchange rates we use propensity score matching psm to investigate the relationship between the exchange rate regimes of 70 developing countries and fdi into such countries using de facto regime classifications we include a large number of variables in the logit equation that estimates the propensity score the probability of regime choice we also use general to specific modeling to get alternative parsimonious versions based on four matching procedures the average treatment effects suggest with overall modest statistical significance that relatively fixed de facto regimes do encourage fdi compared with relatively floating regimes in addition the estimated effects are sometimes economically large

on the nexus of financial development economic growth and energy consumption in china new perspective from a gmm panel var approach abstract this paper studies the endogenous relationships among financial development energy consumption and economic growth in china by applying a gmm panel var approach with a panel data of 30 chinese provinces over the period 1996q1 2015q4 financial development is measured by six individual indicators and by a comprehensive indicator obtained through the pca method we also account for regional heterogeneity by dividing our sample into three regions eastern region central region and western region we underline our findings in three aspects first financial development measured by most individual indicators m2 credit revenue of the insurance industry and stock market value and the comprehensive one has a significantly negative impact on economic growth second energy consumption can significantly contribute to economic growth in all regions while no feedback effect is found except in the western region this result is further supported by the granger causality tests last financial development in the sense of m2 credit stock turnover and the comprehensive indicator can significantly lessen energy consumption in all regions but this inhibitory effect is found to be largest in the western region followed by the eastern region and be smallest in the central region the granger causality tests confirm further the existence of heterogeneity across regions a bidirectional granger causality between the two variables is found in the eastern region a unidirectional granger causality running from energy consumption to financial development is identified in the central region and no significant causal relationship shows up in the western region our findings provide valuable policy implications for china heading for a green economic growth

asean income gap and the optimal exchange rate regime this article investigates the optimal exchange rate regime in a group of asean countries which minimizes the adverse effects of foreign demand shocks on real output the real exchange rate price

why and how fdi stocks are a biased measure of mne affiliate activity many international business ib studies have used foreign direct investment fdi stocks to measure the aggregate value adding activity of multinational enterprises mne affiliates in host countries we argue that fdi stocks are a biased measure of that activity because the degree to which they overestimate or underestimate affiliate activity varies systematically with host country characteristics first most fdi into countries that serve as tax havens generate no actual productive activity thus fdi stocks in such countries overestimate affiliate activity second fdi stocks do not include locally raised external funds funds widely used in countries with well developed financial markets or volatile exchange rates resulting in an underestimation of affiliate activity in such countries finally the extent to which fdi translates into affiliate activity increases with affiliate labor productivity so in countries where labor is more productive fdi stocks also result in an underestimation of affiliate activity we test these hypotheses by first regressing affiliate value added and affiliate sales on fdi stocks to calculate a country specific mismatch and then by regressing this mismatch on a host country s tax haven status level of financial market development exchange rate volatility and affiliate labor productivity all hypotheses are supported implying that fdi stocks are a biased measure of mne affiliate activity and hence that the results of fdi data based studies of such activity need to be reconsidered

foreign direct investment and total factor productivity growth new macro evidence although the role of foreign direct investment fdi in facilitating technology transfer is well known in the literature empirical evidence regarding the effect of fdi on growth is mixed the contradictory results in the literature may be due to the failure to account for endogeneity and for the abortive capacity of the hosting countries using panel data for 49 countries over the period 1974 2008 and the existence of investment promotion agencies in the receiving countries as an instrument our results show that increased fdi stock leads to higher productivity growth we also find a significant positive effect on the interaction between fdi stock and distance to the technological frontier suggesting that the ability of technologically backward countries in absorbing technologies developed at the frontiers increases as more fdi stock is accumulated

purchasing power parity and unit root tests using panel data abstract this paper reports the results of unit root tests for real exchange rates using a panel framework this panel approach provides greatly improved power compared to conventional univariate time series unit root tests we obtain evidence supporting ppp over the recent flexible exchange rate period for g 6 and oecd countries we show explicitly that failure to find such evidence in previous research was due to the low power of the tests

political instability and economic growth in developing economies some specification empirics abstract the paper empirically explores the specification of the relationship between political instability pi and economic growth using data on different events of coups d etat in sub saharan africa it finds that when a principal component of the various pi events is employed in an augmented production function basic specification tests are met however specifying pi using the separate events such as successful coups results in a potentially misspecified relationship reduced model fit and underestimation of the adverse pi effect

human capital and fdi inflow an assessment of the african case summary this study assesses the role of human capital hk on fdi inflows to sub saharan africa it uses panel data for the period 1980 2012 to asses if changing skill needs influence fdi inflows several measures of hk are used to assess whether the quality of labor explains fdi flows over the study period various versions of an fdi model were estimated and the results show that all measures of hk have a significant influence on fdi as are the traditional variables there is no evidence of the increasing importance of hk on fdi over time probably reflecting the type of fdi flowing into ssa

the causal relationship between information and communication technology and foreign direct investment this paper investigates the simultaneous causal relationship between investments in information and communication technology ict and foreign direct investment fdi with reference to its implications on economic growth for the empirical analysis we use data from 23 major countries with heterogeneous economics development for the period 1976 99 the results of unit roots and johansen co integration tests indicate variations in degrees of integration among the sample countries our causality test results suggest that there is a causal relationship from ict to fdi interpreted as the higher level of ict investment leads to increased inflow of fdi ict contributes to economic growth indirectly by attracting more foreign direct investment in developed countries there already exist a build up ict capacity which causes inflow of fdi while in developing countries ict capacity must be build up to attract fdi the inflow of fdi causes further increases in ict investment and capacity

foreign direct investment and economic growth an increasingly endogenous relationship summary this paper investigates whether foreign direct investment fdi affects economic growth based on a panel of data for 84 countries over the period 1970 99 both single equation and simultaneous equation system techniques are applied to examine this relationship a significant endogenous relationship between fdi and economic growth is identified from the mid 1980s onwards fdi not only directly promotes economic growth by itself but also indirectly does so via its interaction terms the interaction of fdi with human capital exerts a strong positive effect on economic growth in developing countries while that of fdi with the technology gap has a significant negative impact

electoral rules political competition and fiscal expenditures regression discontinuity evidence from brazilian municipalities we exploit a discontinuity in the rules of brazilian mayoral elections to investigate whether political competition has a causal impact on fiscal policy choices in municipalities with fewer than 2

are real exchange rates nonstationary evidence from a panel data test it is well documented that real exchange rates between the united states and many industrialized countries in the post bretton woods period are integrated this result implies that purchasing power parity ppp does not hold even as a long run relationship this paper demonstrates that the failure to reject the unit root hypothesis may result from the low power of existing univariate test procedures i test for unit roots in real exchange rates by employing a more powerful panel based procedure using both cpi and wpi real dollar exchange rate data i strongly reject the null hypothesis of a unit root my results provide overwhelming support for the long run ppp under the current float copyright 1996 by ohio state university press

is growth corrupted or bureaucratic panel evidence from the enlarged eu abstractthis article aims at analysing the issue of conditional convergence in the new enlarged european union eu over the period 1995 2012 by means of panel data techniques we examined the issue of conditional convergence in the enlarged eu giving particular attention to the effects of corruption and bureaucracy on growth controlling for a widely used set of explanatory variables such as investment domestic and foreign human capital formation inflation general government final consumption and trade openness furthermore we examine if growth responds differently to corruption and bureaucracy in the new eu members by means of two group specific interaction variables to capture possible different responses to corruption and bureaucracy the analysis reveals evidence of conditional convergence in the enlarged eu with investment share foreign direct investment human capital and country openness appearing as robust growth drivers in contrast inflation and government consumption rather hamper gro

did fdi really cause chinese economic growth a meta analysis summary foreign direct investment fdi has been linked to economic growth in a number of countries productivity spillovers at the firm level have been identified as a key element in the process by which fdi stimulates economic growth moreover there is evidence of fdi related productivity spillovers in china whether these spillovers have been of sufficient size to affect growth at the aggregate level however is an empirical question we apply meta analysis to the corresponding empirical literature to find an answer our main finding is that the effect of fdi on chinese economic growth is much smaller than one would expect from a naive aggregation of existing estimates publication bias and a profusion of estimates based on less preferred study and sample characteristics have served to inflate observed estimates once these effects are accounted for the estimated effect of fdi on chinese economic growth is reduced to statistical insignificance this suggests that the cause s of the chinese economic miracle likely lie elsewhere

u s foreign direct investment in latin america and the caribbean a case of remittances and market size abstractthis article investigates the effect of remittances on u s foreign direct investment fdi flows to latin america and the caribbean lac it covers 26 countries for the period 1983 2010 the results show a positive and significant impact of remittances on u s fdi flows however this effect depends upon the level of gross domestic product gdp per capita of the host country on average the results show that increasing remittances by one standard deviation increases u s fdi flows by 0 44 percent a year also host country demand positively affects u s fdi flows which supports the market size hypothesis

regional innovation and spillover effects of foreign direct investment in china a threshold approach huang l liu x and xu l regional innovation and spillover effects of foreign direct investment in china a threshold approach regional studies using a data set on twenty nine chinese provinces for the period 1985 2008 this paper establishes a threshold model to analyse the relationship between spillover effects of foreign direct investment fdi and regional innovation in china there is clear evidence of double threshold effects of regional innovation on productivity spillovers from fdi specifically only when the level of regional innovation reaches the minimum innovation threshold will fdi in the region begin to produce positive productivity spillovers furthermore positive productivity spillovers from fdi will be substantial only when the level of regional innovation attains a higher threshold the double threshold divides chinese provinces into three super regions in terms of innovation with most provinces positioned within the middle level innovation super region policy implications are di

when and where does foreign direct investment generate positive spillovers a meta analysis local firms may attract productivity spillovers from foreign investors yet these vary with local firms awareness capability and motivation to react to foreign entry in consequence spillovers vary across countries at different levels of economic development we apply competitive dynamics theory to analyze these contextual moderators of spillovers and test hypotheses thus derived in a meta analysis of the empirical literature on spillovers our analysis suggests a curvilinear relationship between spillovers and the host country s level of development in terms of income institutional framework and human capital

foreign direct investment and endogenous growth in vietnam foregin direct investment s fdi s contribution to growth has been a controversial topic in economic literature and appears to be country specific in this article we use time varying coefficients in an augmented production function and let fdi indirectly affect gross domestic product growth through labour productivity this approach creates built in heteroskedasticity so the feasible generalized least square estimation is employed the results show that fdi has significant and positive effect on labour productivity and economic growth in vietnam but the effect is not equally distributed among economic sectors

seigniorage and political instability the importance of seigniorage relative to other sources of government revenue differs markedly across countries this paper tries to explain this regularity by studying a political model of tax reform the model implies that countries with a more unstable and polarized political system will have more inefficient tax structures and thus will rely more heavily on seigniorage this prediction of the model is tested on cross sectional data for seventy countries the authors find that after controlling for other variables political instability is positively associated with seigniorage copyright 1992 by american economic association

currency crashes in emerging markets an empirical treatment we use a panel of annual data for over 100 developing countries from 1971 through 1992 to characterize currency crashes we define a currency crash as a large change of the nominal exchange rate that is also a substantial increase in the rate of change of nominal depreciation we examine the composition of the debt as well as its level and a variety of other macroeconomic factors external and foreign crashes tend to occur when output growth is low the growth of domestic credit is high and the level of foreign interest rates are high a low ratio of fdi to debt is consistently associated with a high likelihood of a crash

testing the pollution haven effect does the type of fdi matter many studies have tested the pollution haven effect phe which predicts that the tightening of local environmental regulations would shift foreign direct investment fdi to less regulated jurisdictions however most of them ignored the heterogeneity of fdi this paper studies the phe on local market oriented and export oriented fdi and tests whether the two types have different responsiveness to environmental regulations in a host country a simple model is developed to describe how different types of multinational companies respond in distinct ways to stricter environmental policies in host countries using us outward fdi data for 50 host countries and a survey measure of both the stringency and the enforcement of local environmental regulations i find a significant deterrent effect of local environmental regulations on inward fdi furthermore fdi in a host country is not only affected by local environmental regulations but also by environmental regulations in proximate countries more importantly accounting for the relative stringency of environmental regulations between a host country and the united states is critical for identifying a phe i find a significantly stronger effect of environmental policies on both types of fdi in host countries with environmental regulations that are stricter than those in the united states in these countries export oriented fdi also exhibits a greater sensitivity to local environmental regulations than local market oriented fdi

does fdi increase productivity the role of regulation in upstream industries in view of substantial changes having taken place in the regulatory environment and in the light of the increasing role of inter industry linkages we examine whether the total factor productivity tfp growth impact of foreign direct investment fdi is determined by regulation in upstream sectors econometric estimates illustrate that fdi exerts a positive impact on the growth of oecd industries which slows down as upstream regulation rises to raise the reliability of our estimates we use instruments for fdi and regulation that are as free as possible of endogenous association with tfp growth our instrumental variable estimates verify that the influence of fdi on tfp growth depends negatively on the level of upstream regulation non parametric estimates confirm that the highest impact of fdi takes place at the lowest levels of entry regulation and public ownership

bad luck bad policy and learning a markov switching approach to understanding postwar u s macroeconomic dynamics abstract this paper evaluates the role of monetary policy in understanding the u s post war macroeconomic fluctuations we construct a medium size dsge model in which the central bank through a real time learning process can make mistakes in estimating key elasticities between macroeconomic aggregates and the central banks objectives may change over time the model also features time varying volatilities of non policy shocks we find that misperceptions of the persistence of inflation and the slope of the phillips curve could affect optimal monetary policy decision making therefore their accurate prediction is key for achieving successful monetary policy outcomes in addition we argue that the monetary policy shift geared toward inflation stabilization in the late 1970s changed the composition of output making the marginal efficiency of investment shock that proxies for the functioning of the financial sector the most important contributor to the business cycle

does human capital constrain the impact of foreign direct investment and remittances on economic growth in ghana this article empirically investigates whether human capital constrains the impact of foreign direct investment fdi and remittances on economic growth in ghana an economic growth model for ghana is specified and estimated using fully modified ordinary least squares fmols estimator and employing annual data spanning the period 1965 to 2008 empirical results indicate that fdi and remittances are key determinants of economic growth in ghana results indicate that human capital enhances the impact of fdi and remittances on economic growth although both government expenditure and trade openness are growth enhancing government expenditure appears to crowd out private investment empirical results also indicate that domestic inflationary pressures unstable political environment and volatile global economy exert a negative impact on economic growth in ghana

foreign direct investment and growth in india a cointegration approach the two way link between foreign direct investment and growth for india is explored using a structural cointegration model with vector error correction mechanism the existence of two cointegrating vectors between gdp fdi the unit labour cost and the share of import duty in tax revenue is found which captures the long run relationship between fdi and gdp a parsimonious vector error correction model vecm is then estimated to find the short run dynamics of fdi and growth our vecm model reveals three important features a gdp in india is not granger caused by fdi the causality runs more from gdp to fdi b trade liberalization policy of the indian government had some positive short run impact on the fdi flow and c fdi tends to lower the unit labour cost suggesting that fdi in india is labour displacing

international capital mobility and unemployment dynamics empirical evidence from oecd countries we use a panel of 20 oecd countries over a 30 year period to estimate the implications of international capital mobility for unemployment we nd that the increase in capital ows since the mid 1980s has contributed to an ampli cation of the impulse response of unemployment to country speci c shocks and to a fall in the persistence of unemployment in response to the same shocks

intellectual property rights fdi r d and economic growth a cross country empirical analysis this paper aims to empirically examine how intellectual property rights iprs protection foreign direct investment fdi and research and development r d along with other possible variables may affect the economic growth of the host country using the panel data of 92 countries during 1970 2007 i conclude from the system generalised method of moments estimation that domestic investment share fdi r d capacity openness to trade human capital and iprs protection all have statistically significant and positive impacts on economic growth a further investigation of countries at different levels of development suggests two striking findings first besides the domestic investment openness human capital and iprs protection r d is the key to drive economic growth in the higher income countries while fdi is the engine of growth in both higher income and middle income countries second a positive and significant impact of iprs protection on economic growth is found in both higher income and lower income countries however such an impact is not detected in the middle income countries

growth by destination the role of trade in africa s recent growth episode summary over the period 1990 2009 africa has experienced a distinct and favorable reversal in its growth fortunes in stark contrast to its performance in the preceding decades leading to a variety of hypotheses seeking to explain the phenomenon this paper presents both cross country and panel data evidence on the causal factors driving the recent turnaround in africa s growth and takes the unique approach of disaggregating the separate growth impacts of africa s bilateral trade with china europe and america the empirical analysis presented in this paper suggests that the primary and most robust causal factors driving africa s recent growth turnaround are private sector and foreign direct investment although empirical evidence of the role of bilateral trade openness in africa s recent growth emerges within a fixed effect estimation setting these results are not as robust when endogeneity and other issues are fully accounted for among the three major bilateral partners africa s bilateral trade with china has been a relatively important factor spurring growth on the continent and especially so in resource rich oil producing and non landlocked countries the econometric results are not as supportive of growth inducing effects of foreign aid these findings emerge after applying a variety of panel data specifications to the data including the recent fixed effects filtered fef estimator introduced by pesaran and zhou 2014 and the dynamic panel generalized method of moments gmm estimator which allows for endogeneity between trade and growth

causality between foreign investment and spillover efficiency while there is considerable evidence on the observed linkage between foreign investment and technical efficiency of the developing countries the question of causality between them has not been investigated this paper re examines the relationship between foreign direct investment and technical efficiency in mexico brazil chile singapore and zambia using granger causality tests the results suggest that foreign direct investment and labour productivity are causally independent variables however capital formation of the host country is found to exert causal influence on foreign investment

foreign direct investment regulations and growth this paper explores the linkage between income growth rates and foreign direct investment fdi inflows so far the evidence is rather mixed as no robust relationship between fdi and income growth has been established the authors argue that countries need a sound business environment in the form of good government regulations to be able to benefit from fdi using a comprehensive data set for regulations they test this hypothesis and find evidence that excessive regulations restrict growth through fdi only in the most regulated economies this result holds true for different specifications of the econometric model including instrumental variable regressions

accounting for growth with new inputs this paper examines the aggregate production function in an economy characterized by the creation of new intermediate inputs the authors show how growth can be decomposed into changes in higher quantities of existing inputs and a greater range of inputs indexes of total factor productivity would reflect the latter the authors construct a dynamic monopolistic competition model in which products are endogenously introduced and simulate that model to produce artificial data when used in standard growth accounting regressions the data can appear to be generated by an economy with exogenous technical change and approximately constant returns to primary factors copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the relationship amongst energy consumption foreign direct investment and output in developed and developing countries abstract the current study inspects the nexus amongst energy consumption fdi inflows and output in 75 countries meantime the period 1990 2010 we further examine this relationship with regard to developed as well as developing countries assembled from diverse geographic regions from the world the present results display that there is proof of bidirectional linkage concerning fdi and output per capita concerning renewable energy consumption and gross domestic product per capita and concerning non renewable energy and gross domestic product per capita in the three groups of countries developed all and developing in addition the judgments detect a bidirectional linkage concerning renewable energy consumption and fdi in developed countries an increase of 1 rate in renewable energy participates to improving fdi by 0 185 and at the same time an increase of fdi contributes to enhancing renewable energy by 0 292 nevertheless in the case of all and developing countries the results discover unidirectional link moving from foreign inflows to both sorts of energy in conclusion the policy recommendations of our empirical results are taken into consideration

institutional impact of foreign direct investment in china summary we provide firm level empirical evidence that the presence of foreign direct investment fdi has positively affected the institutional quality of the host regions in china specifically chinese domestic firms located in regions with a higher level of fdi tend to enjoy a lower level of tax and fee burdens less arbitrariness in such burdens as well as better legal protection to address the potential issue of endogeneity we adopt the instrumental variable approach in addition we explore the specific mechanisms through which the institutional impact is materialized and provide various extensions of the empirical findings that offer further support for the fdi induced institutional improvement argument

is foreign aid a vanguard of foreign direct investment a gravity equation approach summary this paper investigates whether and how foreign aid facilitates foreign direct investment fdi flows into less developed countries we employ a large data set of source recipient country pairs and conduct gravity equation type estimation our empirical methodology enables us to examine an effect through which aid from a donor country promotes fdi from the same donor in particular which we call a vanguard effect we find that foreign aid in general does not have any significant effect on fdi however when we allow for differences in the size of aid effects across donor countries we find robust evidence that foreign aid from japan in particular has a vanguard effect i e japanese aid promotes fdi from japan but does not attract fdi from other countries