The relationship between foreign portfolio investment and foreign direct investment on economic growth study at indonesia stock exchange and bank of indonesia period 20062014 thesis pdf. Growth and the quality of foreign direct investment. Louzi and abadi 2011 used fdiled growth hypothesis in testing the effect of foreign direct investment on economic growth in jordan. Foreign portfolio investment fpi consists of securities and other financial assets passively held by foreign investors. This was with a view to explore the nexus between foreign portfolio investment, democracy and economic growth in nigeria. Impact of foreign direct investment and trade on economic. During the year of 19961997, on average, the economy had grown at annual rate of 8.
A first chapter will consider statistical problems related to the questions of definition, sources of data and analysis of the relative importance of the two major investment flows fo r. Annual timeseries data for the period 1986 to 20 on foreign portfolio investment and maximum lending rate were. Thus, less volatility in international portfolio flows is associated with high interest rate, currency depreciation, foreign direct investment, lower inflation, and higher gdp growth rate of the host country. Pdf foreign portfolio investment and economic growth in malaysia. Moreover, jointly fdi, fmd and gdp growth collectively granger causes fpi, while. Foreign portfolio investment and economic growth in nigeria.
This was with a view to explore the nexus between foreign portfolio investment, democracy and. Foreign portfolio investment and economic growth in malaysia core. The conclusion was that economic growth may harm openness and foreign direct investment in the three countries investigated. Pdf foreign portfolio investment, foreign bank lending. One of the arguments for pursuing foreign direct investment fdi by countries is the belief that fdi bridges the gap between rich and poor nations by promoting economic growth and development in addition to generation of technological transfers. Foreign portfolio investment and economic growth in. Pdf this study explored the impact of foreign portfolio investment on economic growth in nigeria from 1986 to 2017. Impact of foreign direct investment on nigeria economic. Pdf this study examines the relationship between foreign portfolio investment fpi and malaysias economic performance. Impact of foreign direct investment on domestic investment. In terms of policy implications, this studys analyses do not support special tax breaks and subsidies to attract foreign capital. This study mainly focuses on analyzing the short run relationships between the causal variables mainly fdi and economic growth. A great number of studies on this subject have made useful contributions to.
While some researchers suggest a positive effect, others found a negative effect. Foreign portfolio investment and economic growth in malaysia 121 it is an important caveat that the findin gs of this study ar e confined by the empirical restrictions resulting from the nature of. Foreign direct investment and economic growth in the european. There have been controversies regarding the effect of foreign direct investment on the growth of the host countrys economy. Although capital flows are one of the most attractive subjects to the researchers, there still are nish areas to be analyzed. Foreign portfolio investment, economic growth, granger causality.
The study therefore analyzed the direction and significance of the effect of foreign portfolio investment in the economic growth in nigeria covering the period 19902005. Alfaro, laura, areendam chanda, sebnem kalemliozcan, and selin sayek. 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. Foreign portfolio investment and economic growth in nigeria democratic settings ibrahim t. Abstract the study examined the relationship between foreign portfolio investment, democracy and economic growth in nigeria. Foreign portfolio investment and economic growth in malaysia 111 the rest of the paper is organised as follows. The effect of foreign direct investment on economic growth. Secondary data were sourced from the central bank of. This study examines the relationship between foreign portfolio investment. The results reveal that there exists significant relationship between macroeconomic factors and foreign portfolio investment volatility. How does foreign direct investment promote economic growth.
Investigating the impact of foreign capital on economic growth has important policy implications. The impact of foreign capital inflows on economic growth. An empirical analysis of kenyan data daniel o abala, phd. The impact of foreign capital inflows on economic growth and employment in egypt. The main arguments in this direction is that if these countries gain access to world financial markets and other donor.
It cannot be denied that fdi has contributed significantly to the. The level of investment of a country is one of the main determinants of economic growth and development. Fdi is an important vehicle of technology transfer from developed countries to developing countries. Foreign portfolio investment and economic growth in malaysia. Fdi was found to cause economic growth on australian economy only.
Real effects of capital inflows in emerging markets. Foreign direct investment and economic growth dialnet. Foreign direct investment fdi and foreign portfolio investment fpi provide strong economic impetus to a country. Fdi inflows are often seen as important catalyst for economic growth in the developing countries. The economy went on to an extensive diversification and continued economic growth averaging 9% per annum in the period of 19881997. The aim of this study is to investigate and analyze the impacts of fdi and other drivers on economic growth in sub saharan africa. Impact of foreign direct investment on the economic growth. Foreign direct investment fdi is very low in zimbabwe and this is resulting in low levels of economic growth and standards of living and has hindered efforts to promote economic prosperity and sustainable development for the country. Foreign direct investment is in contrast to portfolio investment, which is a passive investment in the securities of another country such as stocks and bonds. The findings revealed that economic growth is directly related to inflow of foreign direct investment and it is also statistical significant at 5% level which implies that a good performance of the economy is a positive signal for inflow of foreign direct investment. We examine the relationship between foreign portfolio investment fpi and.
The mid 1980s saw the convergence of various factors which encouraged the inflow of fdi into malaysia. Foreign portfolio investment, foreign bank lending, and. Effect of foreign direct investment on economic growth in. This paper contains an empirical assessment of the growth effects of foreign direct investment fdi in european union eu countries, when controlling for. Foreign direct investment and economic growth in the short. In contrast to the empirical literatures focus on foreign direct investment fdi, this study examines the effects of foreign portfolio investment fpi and other foreign investment ofi on economic growth using data on 88 countries from 1977 through 2000. The current paper attempts to analyse the impact of foreign direct investment fdi on the economic growth of pakistan. The study examined the relationship between foreign portfolio investment, democracy and economic growth in nigeria. In this context, developing countries, and least developed countries in particular. Difference between foreign direct investment and foreign.
If fdi has a positive impact on economic growth after controlling for endogeneity and other growth determinants, then this weakens arguments for restricting foreign investment. The study utilizes time series data over the period of 19912015. Pdf foreign portfolio investment and economic growth in. Foreign direct investment fdi is argued to play a pivotal role in accelerating economic growth eg of a host country especially in developing and. Foreign portfolio investment, foreign bank lending, and economic growth. Hence this research seeks to find the relationship and impact of interest rates on fdi inflows. The research design adopted was a combination of exploratory and ex post facto research designs. Does foreign direct investment accelerate economic growth. Foreign portfolio investment and economic growth in nigeria 1986. It is against this backdrop that this study examined the effect of foreign direct investment on economic growth in nigeria. In a small open economy, final goods production is carried out by foreign and domestic firms, which compete for skilled labor, unskilled labor, and intermediate products.
We will know about these investments and the differences between them in this article. Instead, the literature suggests that sound policies encourage economic growth and also provide an attractive environment for foreign investment. Absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth. The economic growth imperative of foreign portfolio investment for. Organization for economic cooperation and development countries.
Thus, this study focuses on the the relationship between foreign portfolio investment to istanbul. Foreign capital brings credit, knowledge, and discipline to the host countries, which are thought to be essential for economic growth tong and wei, 2011. Pdf foreign portfolio investment on economic growth of. The relationship between foreign portfolio investment. Foreign direct investment fdi is generally considered as a key driver of global economic integration. Pdf the economic growth imperative of foreign portfolio. Impact of foreign direct investment and trade on economic growth foreign direct investment fdi and trade are often seen as important catalysts for economic growth in the developing countries. Foreign portfolio investmenteconomic growth nexus in nigeria. Foreign portfolio investment fpi refers to investing in the financial assets of a foreign country, such as stocks or bonds available on an exchange. With increase in globalization, fdi and fpi are crucial to improve the economic standards and private sectors of a country. The aim of this paper is to investigate the influence of foreign direct investment fdi on economic growth in southern asia for the period 19772009. If, however, we find that fdi does not exert a positive.
Pdf foreign portfolio investment on economic growth of nigeria. Last years world investment report highlighted the emerging structural impact of the digital economy on foreign direct investment. Foreign direct investment and economic growth literature. Like most other developing countries, the malaysian government welcome fdi rather than portfolio investment simply because the government believed that fdi would play an important role in malaysias economic development. The impact of interest rates on foreign direct investment. Macroeconomic factors and foreign portfolio investment. This study tries to ascertain the impact of foreign portfolio investment fpi on economic growth as well as the long run determinants of fpi in nigeria, such that. The result showed that in the longrun foreign portfolio investment had positive and significant effect on the economic growth in nigeria t 3. Foreign portfolio investment and economic growth essay. This paper traces the effect of greenfield investment disaggregated into six sectors on the one hand and the effect of external debt on the other hand on sectoral growth and employment in egypt over the period 19832014.
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