International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Capital Inflows and Economic Growth A Comperative Studyiosrjce
This study examines the impact of capital inflows on economic growth of developing* economies; the
case of Nigeria Ghana and India from 1986-2012. This is necessitated by the doubts being raised as whether the
huge inflows of foreign capita! in developing economies over the years have transmitted to real economic
growth. Augmented Dickey Fuller unit root test was employed to evaluate the stationarity of the data, while
Johansen Co-integration was used to estimate the long-run equilibrium relationship among the variables. The
casual relationship was tested using Granger Causality, and Ordinary Least Square method was used to
estimate the model. The finding reveals that capital inflows have significant impact on the economic growth of
the three countries. In Nigeria and Ghana, foreign direct and portfolio investment and foreign borrowings have
significant and positive impact on economic growth. Workers' remittances significantly and positively related to
the economic growth of the three countries. The enabling environment should be created in the Developing
Countries to encourage more inflow of foreign investments and workers remittances while India specifically
should channel their foreign aids to productive ends. This will help in dosing the savings-investment gap and
encourage economic growth in these countries. The study signifies that capital inflows is indispensable in
dosing the savings-investment gap required for economic growth of developing countries.
Tax Incentives and Foreign Direct Investment in Nigeriaiosrjce
Given the significance of Foreign Direct Investment (FDI) to economic growth and the use of tax
incentives as a strategy among government of various countries to attract FDI, this study examines the influence
of tax incentives in the decision of an investor to locate FDI in Nigeria. Data were drawn from annual statistical
bulletin of the Central Bank of Nigeria and the World Bank World Development Indicators Database. The work
employs a model of multiple regressions using static Error Correction Modelling (ECM) to determine the time
series properties of tax incentives captured by annual tax revenue as a percentage of Gross Domestic Product
(GDP)and FDI. The result showed that FDI response to tax incentives is negatively significant, that is, increase
in tax incentives does not bring about a corresponding increase in FDI. Based on the findings, the paper
recommends, amongst others, that dependence on tax incentives should be reduced and more attention be put on
other incentives strategies such as stable economic reforms and stable political climate.
This study used error correction model (ECM) to analyse the effect of total external debt (TED) on the Nigerian economy proxied by gross domestic product (GDP) during the period 1980-2015. The data such as TED and GDP were obtained from Central Bank of Nigeria (CBN) statistical bulletin. The result of the finding revealed that total external debt exerts negative and significant influence on GDP. This implies that, as total external debt increases, GDP also decreases and vice versa. Therefore, the researcher recommends that any external loan obtained by the government should be channelled to productive projects that yield high on returns on investment rather than allocating the fund to finance dead-weight debt, hence, engendering sustainable economic growth in the economy.
Effect of foreign direct investment and stock market development on economic ...Alexander Decker
This document analyzes the effect of foreign direct investment and stock market development on economic
growth in Nigeria from 1980 to 2009. It finds that both foreign direct investment and lagged stock market
development have a small but statistically significant positive effect on economic growth. The trends show
that foreign direct investment and stock market development experience cyclical movements. Lagged
exchange rate appreciation also enhances economic growth in Nigeria. The study aims to examine trends in
foreign investment and stock markets, and establish their relationship to economic growth, in order to guide
policymakers.
11.effect of foreign direct investment and stock market development on econom...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. It employs techniques such as unit root testing, cointegration, and error correction modeling. The results show that both lagged FDI and lagged stock market development, as measured by market capitalization as a percentage of GDP, have a small but statistically significant positive effect on economic growth. Trend results indicate that FDI and stock market development experience cyclical movements. Lagged exchange rate is also found to have a positive impact on growth, suggesting that exchange rate appreciation enhances growth in Nigeria. The findings suggest more investment is needed in these markets to boost economic growth.
Relative Potency of Internal and External Sources of Financing Nigerian Econo...iosrjce
The study is aimed at determining the relative potency of internal and external sources of financing
economic growth in Nigeria using time series data from 1983 to 2012. Ordinary least square regression method,
unit root test, Johansen cointegration test and error correction model were used for the purpose of analyses.
Gross national saving, internal debt, grants and foreign investment are stationary at level, gross domestic
investment at first difference and gross domestic product at second difference. From the over parameterized
ECM, none of the internal and external financing options is significant in explaining economic growth. In the
group of internal options, gross national saving, gross domestic investment and internal debt contribute
positively to growth in the short and long run, the only exception being gross national saving in the short run. In
the group of external options however, only grant contribute positively to growth in the long and short run.
Foreign direct investment appears like a wolf in sheep’s clothing given its long run negative impact. Finally,
growth is a decreasing and an increasing function of external debt in the short and long run respectively. It is
noteworthy that a very high constant coefficient implies that there are many factors that actually determine
Nigerian gross domestic product outside the model. While the variables of interest are theoretically expected to
play significant roles, they fail empirically. A comparison of the two modes shows that internal factors prove to
be more reliable in accelerating Nigerian economic growth.
This document is a research proposal submitted by a group of students at University Malaysia Sarawak investigating the determinants of foreign direct investment in Malaysia. It provides background on FDI and its importance to the Malaysian economy. The study aims to determine what factors influence FDI inflows, with a focus on exchange rates, market size, and infrastructure. The methodology section outlines the hypotheses, econometric model, and statistical tests that will be used, including OLS regression, tests for serial correlation and heteroskedasticity, and Granger causality.
Capital Inflows and Economic Growth A Comperative Studyiosrjce
This study examines the impact of capital inflows on economic growth of developing* economies; the
case of Nigeria Ghana and India from 1986-2012. This is necessitated by the doubts being raised as whether the
huge inflows of foreign capita! in developing economies over the years have transmitted to real economic
growth. Augmented Dickey Fuller unit root test was employed to evaluate the stationarity of the data, while
Johansen Co-integration was used to estimate the long-run equilibrium relationship among the variables. The
casual relationship was tested using Granger Causality, and Ordinary Least Square method was used to
estimate the model. The finding reveals that capital inflows have significant impact on the economic growth of
the three countries. In Nigeria and Ghana, foreign direct and portfolio investment and foreign borrowings have
significant and positive impact on economic growth. Workers' remittances significantly and positively related to
the economic growth of the three countries. The enabling environment should be created in the Developing
Countries to encourage more inflow of foreign investments and workers remittances while India specifically
should channel their foreign aids to productive ends. This will help in dosing the savings-investment gap and
encourage economic growth in these countries. The study signifies that capital inflows is indispensable in
dosing the savings-investment gap required for economic growth of developing countries.
Tax Incentives and Foreign Direct Investment in Nigeriaiosrjce
Given the significance of Foreign Direct Investment (FDI) to economic growth and the use of tax
incentives as a strategy among government of various countries to attract FDI, this study examines the influence
of tax incentives in the decision of an investor to locate FDI in Nigeria. Data were drawn from annual statistical
bulletin of the Central Bank of Nigeria and the World Bank World Development Indicators Database. The work
employs a model of multiple regressions using static Error Correction Modelling (ECM) to determine the time
series properties of tax incentives captured by annual tax revenue as a percentage of Gross Domestic Product
(GDP)and FDI. The result showed that FDI response to tax incentives is negatively significant, that is, increase
in tax incentives does not bring about a corresponding increase in FDI. Based on the findings, the paper
recommends, amongst others, that dependence on tax incentives should be reduced and more attention be put on
other incentives strategies such as stable economic reforms and stable political climate.
This study used error correction model (ECM) to analyse the effect of total external debt (TED) on the Nigerian economy proxied by gross domestic product (GDP) during the period 1980-2015. The data such as TED and GDP were obtained from Central Bank of Nigeria (CBN) statistical bulletin. The result of the finding revealed that total external debt exerts negative and significant influence on GDP. This implies that, as total external debt increases, GDP also decreases and vice versa. Therefore, the researcher recommends that any external loan obtained by the government should be channelled to productive projects that yield high on returns on investment rather than allocating the fund to finance dead-weight debt, hence, engendering sustainable economic growth in the economy.
Effect of foreign direct investment and stock market development on economic ...Alexander Decker
This document analyzes the effect of foreign direct investment and stock market development on economic
growth in Nigeria from 1980 to 2009. It finds that both foreign direct investment and lagged stock market
development have a small but statistically significant positive effect on economic growth. The trends show
that foreign direct investment and stock market development experience cyclical movements. Lagged
exchange rate appreciation also enhances economic growth in Nigeria. The study aims to examine trends in
foreign investment and stock markets, and establish their relationship to economic growth, in order to guide
policymakers.
11.effect of foreign direct investment and stock market development on econom...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. It employs techniques such as unit root testing, cointegration, and error correction modeling. The results show that both lagged FDI and lagged stock market development, as measured by market capitalization as a percentage of GDP, have a small but statistically significant positive effect on economic growth. Trend results indicate that FDI and stock market development experience cyclical movements. Lagged exchange rate is also found to have a positive impact on growth, suggesting that exchange rate appreciation enhances growth in Nigeria. The findings suggest more investment is needed in these markets to boost economic growth.
Relative Potency of Internal and External Sources of Financing Nigerian Econo...iosrjce
The study is aimed at determining the relative potency of internal and external sources of financing
economic growth in Nigeria using time series data from 1983 to 2012. Ordinary least square regression method,
unit root test, Johansen cointegration test and error correction model were used for the purpose of analyses.
Gross national saving, internal debt, grants and foreign investment are stationary at level, gross domestic
investment at first difference and gross domestic product at second difference. From the over parameterized
ECM, none of the internal and external financing options is significant in explaining economic growth. In the
group of internal options, gross national saving, gross domestic investment and internal debt contribute
positively to growth in the short and long run, the only exception being gross national saving in the short run. In
the group of external options however, only grant contribute positively to growth in the long and short run.
Foreign direct investment appears like a wolf in sheep’s clothing given its long run negative impact. Finally,
growth is a decreasing and an increasing function of external debt in the short and long run respectively. It is
noteworthy that a very high constant coefficient implies that there are many factors that actually determine
Nigerian gross domestic product outside the model. While the variables of interest are theoretically expected to
play significant roles, they fail empirically. A comparison of the two modes shows that internal factors prove to
be more reliable in accelerating Nigerian economic growth.
This document is a research proposal submitted by a group of students at University Malaysia Sarawak investigating the determinants of foreign direct investment in Malaysia. It provides background on FDI and its importance to the Malaysian economy. The study aims to determine what factors influence FDI inflows, with a focus on exchange rates, market size, and infrastructure. The methodology section outlines the hypotheses, econometric model, and statistical tests that will be used, including OLS regression, tests for serial correlation and heteroskedasticity, and Granger causality.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
11.effect of foreign direct investment and stock market development on econom...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. The study employs econometric techniques including unit root tests, cointegration, and error correction modeling. The results show that both FDI and lagged stock market development have a small but statistically significant positive effect on economic growth in Nigeria. Lagged exchange rates also have a positive impact on growth. These findings suggest that FDI, stock market development, and exchange rate appreciation can enhance economic growth in Nigeria.
5.[34 42]effect of foreign direct investment and stock market development on ...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. The study employs econometric techniques including unit root tests, cointegration, and error correction modeling. The results show that both FDI and lagged stock market development have a small but statistically significant positive effect on economic growth in Nigeria. Lagged exchange rates also have a positive impact on growth. These findings suggest that FDI, stock market development, and exchange rate appreciation can enhance economic growth in Nigeria.
Determinants of Foreign Direct Investment in Nigeria (1977-2008) OLADAPO TOLU...dapoace
This document contains a literature review on foreign direct investment (FDI). It begins by defining FDI and discussing how FDI flows are compiled. It then reviews several theories on the determinants and impacts of FDI. Market size, trade openness, macroeconomic stability, and infrastructure development are identified as important determinants of FDI inflows. The literature suggests that while FDI can benefit economic growth, developing effective policies is important to maximize benefits and minimize risks for host countries like Nigeria.
The Determinants of Foreign Direct Investment: A study based on country-level...Yi Zhang
This document is a master's thesis that examines the determinants of foreign direct investment (FDI) using country-level panel data. It begins with an introduction that notes the rapid growth of FDI in recent decades and outlines the research questions. A literature review then discusses previous research on potential factors that influence FDI. The paper will use regression analysis to investigate the effects of various economic, institutional and policy variables on FDI inflows. It will also include regional dummy variables to analyze differences in FDI patterns across geographic regions. The results aim to identify which factors cause variation in FDI levels among countries and how these factors impact FDI.
The study is on the effect of Net capital inflow on inclusive growth in Nigeria. This study seeks to deepen the understanding on how capital inflow creates opportunity for inclusive growth in Nigeria through increase in GDP per capita. The objective of the study were to : determine the effect of Net capital inflow , Net foreign direct investment and trade openness on inclusive growth in Nigeria. The study employed the time series data in its analysis. The period of analysis spanned through 1980-2015 and the dataset required for the analysis were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and National bureau of statistics publications. The study conducted trend analysis, descriptive analysis. The data were also tested for stationarity using the Augmented Dickey Fuller (ADF) unit root test and Ordinary Least Square (OLS) analytical techniques, cointegration test and error correction mechanism. It was evident from the unit root test that the variables were fractionally integrated while the cointegration test reveals that long run relationship exists among the variables. The findings equally reveal that capital inflow exerts significant negative influence on GDP per capita. This could be attributed to the problem of managing external capital flows which has been sub-optimal in most developing economies including Nigeria. The implication of this finding is that the perceived benefits that are associated with capital inflows tend not to hold sway in Nigeria over the sampled period which may be attributed to institutional and governance failure. Owing to the findings, this study recommends for the adoption of investment friendly policies and ensure transparency and good governance, appropriate economic management practices capable of supporting reforms in the Nigerian financial system and guide international capital inflows to ensure that the associated economic turnarounds are people-centered.
This document analyzes the determinants of foreign direct investment (FDI) in Malaysia's manufacturing industry from 1980-2002. It finds:
1) Malaysia received substantial FDI over this period, which was an important driver of its economic growth and industrialization.
2) An econometric analysis using cointegration and fully-modified least squares methods found that increases in education, infrastructure, market size, and current account balance led to increases in FDI, while increases in inflation and exchange rate led to decreases.
3) Major sources of FDI in Malaysia's manufacturing sector included the US, Japan, Germany, and Singapore, with electrical/electronics, petroleum, and chemicals as top recipient industries.
Understanding the Determinants and Impacts of FDI Inflows - An Indian Perspec...Jitender Barna
This document summarizes a student's research on understanding the determinants and impacts of foreign direct investment (FDI) inflows into India. The student examines various economic theories on what drives FDI and reviews previous empirical studies. The methodology section outlines how the student uses a positivist philosophy and deductive approach, collecting secondary data to conduct regression analysis and correlation tests. The findings section indicates that GDP, imports, exports, and exchange rates are significant determinants of FDI in India. While FDI is found to positively impact GDP, capital formation, imports and savings, the magnitude of impact is less than that of domestic capital formation. In conclusion, the student finds that India has not yet received sufficient FDI to significantly impact the
Determinants of Foreign Direct Investment (FDI) in Malaysia: What Matters Most?Nursuhaili Shahrudin
1. The study examines the determinants of foreign direct investment (FDI) inflows to Malaysia from 1970 to 2008 using the autoregressive distributed lag (ARDL) framework.
2. The results suggest that financial development, as measured by money supply, and economic growth, as represented by GDP, have a positive impact on FDI inflows to Malaysia in the long run.
3. A developed financial system and high economic growth rate help create a favorable environment for foreign investors and are important for attracting FDI to Malaysia.
Analysis of foreign investment and identified macroeconomic measures in nigeriaAlexander Decker
This document analyzes the relationship between foreign investment and macroeconomic variables in Nigeria from 1980-2010. It finds that GDP, exchange rates, and money supply have a direct positive impact on foreign investment, while interest rates and inflation have a negative impact. Interest rates and inflation are also found to "Granger cause" foreign investment, indicating they are influential factors. The study recommends that Nigeria implement excellent macroeconomic policies and infrastructure development to enhance investment and reduce poverty.
Modelling the Long Run Determinants of Foreign Portfolio in NigeriaMoses Oduh
1) This study examines the long-run determinants of foreign portfolio investment in Nigeria from 1981-2010 using time series analysis.
2) It finds that foreign portfolio investment has a positive long-run relationship with market capitalization and trade openness in Nigeria.
3) The study aims to help policymakers pursue policies that can attract more foreign portfolio investment in the long run, such as efforts to improve and sanitize the Nigerian capital market.
The aim of this study is to examine the impact of international capital flows on the economic growth in Jordan during the period from 2005 to 2017, The study also examines trends and composition of capital inflows. The study used descriptive analytical research method which was appropriate for the purpose of research. By using time series data, the study found that Foreign Direct Investment (FDI), foreign portfolio investment (FPI), grants (Gr) and Worker remittances (WR) are positively affecting the economic growth direct contribution. Based on the research results, the study came with a several recommendations, the most important recommendation is; the government of Jordan should create and relax the rules and regulations to attract more investors, and also the government should work hand in hand with the developed countries to create economic and employment opportunities, improve the country’s competitiveness, and expand growth within the private sector so that everyone in Jordan has the opportunity to contribute to a brighter future.
This document summarizes a study on the impact of foreign direct investment (FDI) inflows on the Indian stock market. The study analyzed data on annual FDI inflows to India from 2001 to 2011 and the corresponding values of the BSE Sensex and CNX Nifty indices. Statistical analysis showed a strong positive correlation between FDI inflows and both indices, with the FDI inflows explaining around 82% of the variation in the indices. The study concluded that trends in FDI inflows to India have a dependent relationship with trends in the two stock market indices.
1) The document discusses capital market liberalization in Uganda and its potential to promote sustainable economic growth. It provides historical context on Uganda's economic reforms and development of its financial system.
2) It analyzes trends in Uganda's investment climate, sources of investment capital, and weaknesses in its financial system compared to other African nations. Capital market liberalization could help attract more domestic and foreign investment, but risks must be carefully mitigated.
3) The document concludes that a well-regulated implementation of capital market liberalization may produce slow but steady growth in Uganda by diversifying financial instruments and increasing access to capital, especially for small businesses, but social factors must also be considered.
Abstract:Savings are necessary if investment, and hence economic growth and development are to be stimulated. The paper looks at the broad set of possible determinants of private savings in Lesotho using annual time series data for the period 1980-2010. The paper estimates the saving rate function and Error-Correction modelling is used to avoid spurious results. The results indicate that public savings are important in explaining changes in private savings, both in the short-run and long-run and that the terms of trade negatively influence private savings in Lesotho in the long-run.
Foreign capital flows depends on the prevailing monetary forces as supported by capital flows
theory and the mechanism linking these two variables is that contraction of net domestic assets through an
open market sale of bonds will place upward pressure on domestic interest rates. Higher interest rates attract
foreign funds, generating a capital inflow which relieves the pressure on domestic interest rates. Has this
actually happened? It is against this backdrop that the present study investigated the impact of monetary policy
on international capital inflows in Nigeria for a period of 22 years (1994-2015) using time series data. The
autoregressive distributed lag technique revealed that the short-run and long-run significant determinants of
foreign capital inflows are largely from broad money supply, nominal exchange rate, inflation rate and interest
rates spread except inflation rate that is insignificant in the long-run. This outcome upholds theoretical
prediction. Long-run equilibrium relationship was found between the dependent variable and the regressors.
Further examination of the short run dynamics of the model showed that the speed of adjustment coefficients
ECM (-1) to restore equilibrium have a negative sign and statistically significant at 1% level, ensuring that
long-run equilibrium can be attained and about 89% of the short-run deviation from the equilibrium (long-run)
position is corrected annually to maintain the equilibrium. Since the empirical evidence revealed that monetary
aggregates such as broad money supply, nominal exchange rate, inflation rate and interest rates spread
influence foreign capital inflows, it is therefore recommended that government should continue to pursue
expansionary monetary policy and foreign exchange policies that would ensure competitiveness of the
economy in order to attract the much needed foreign capital inflows that would engender economic growth.
The document discusses a study investigating the impact of foreign direct investment (FDI) on economic growth in Pakistan from 1990-2006. The study uses a production function model including FDI, trade, domestic capital, labor, and human capital as independent variables affecting economic growth. The expected results are a statistically significant positive relationship between real per capita GDP and FDI in Pakistan. Policy recommendations could then be made regarding FDI in Pakistan based on the results.
Foreign Direct Investment. Political Economic Digest Series - XVIAkash Shrestha
In this issue, we will be discussing about Foreign Direct Investment (FDI).
Foreign Direct Investment has been a very productive tool for the economic growth of many countries. Recently after the government made the decision to celebrate 2012/13 as investment year and after the agreement with India i.e. Bilateral Investment Promotion and Protection Agreement, the topic of Foreign Direct Investment has been highly discussed among the lawmakers, policymakers and general public. The examples provided in this issue of different countries regarding FDI has shown how the growth rate is positively affected by the investment from outside the country.
FDI as A Source of External Finance to Developing Countries: A Special Refere...iosrjce
In this era of increasingly globalized world economy, FDI is particularly a significant driving force
behind the interdependence of national economies and is considered as the main source of external finance. The
considerable decline in official development assistance (ODA) and commercial bank lending to developing
countries, which are considered as the main sources of meeting the external financing needs of developing
countries, have seen a greater reliance on private capital especially foreign direct investment as a source of
development finance. This is because of the fact that FDI not only remains much less volatile than portfolio and
other investments but it has also proved to be resilient enough during East Asian crisis of 1997-98 and the
Mexican crisis of 1994-95. In view of this growing significance of foreign direct investment, this paper aims to
study the role of FDI in external financing to developing countries, particularly India and China and the
benefits of combining FDI with other private sources of external finance. The paper concludes that FDI is the
major source of external finance for developing economies not only in absolute terms but also relative to other
sources of private capital flows, contributing on an average more than half of net private and official flows
during the period under review. The findings also presented a completely different picture with regard to the
structure of external financing for India and China. For China, FDI is the major external source of finance
followed by debt. On the other hand, for India Workers’ Remittances is the major source of external finance
followed by debt. The paper further concludes that China and India are the first and third most developing
country destinations for investment flows respectively and both are vying with each other to attract more and
more FDI inflows.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
11.effect of foreign direct investment and stock market development on econom...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. The study employs econometric techniques including unit root tests, cointegration, and error correction modeling. The results show that both FDI and lagged stock market development have a small but statistically significant positive effect on economic growth in Nigeria. Lagged exchange rates also have a positive impact on growth. These findings suggest that FDI, stock market development, and exchange rate appreciation can enhance economic growth in Nigeria.
5.[34 42]effect of foreign direct investment and stock market development on ...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. The study employs econometric techniques including unit root tests, cointegration, and error correction modeling. The results show that both FDI and lagged stock market development have a small but statistically significant positive effect on economic growth in Nigeria. Lagged exchange rates also have a positive impact on growth. These findings suggest that FDI, stock market development, and exchange rate appreciation can enhance economic growth in Nigeria.
Determinants of Foreign Direct Investment in Nigeria (1977-2008) OLADAPO TOLU...dapoace
This document contains a literature review on foreign direct investment (FDI). It begins by defining FDI and discussing how FDI flows are compiled. It then reviews several theories on the determinants and impacts of FDI. Market size, trade openness, macroeconomic stability, and infrastructure development are identified as important determinants of FDI inflows. The literature suggests that while FDI can benefit economic growth, developing effective policies is important to maximize benefits and minimize risks for host countries like Nigeria.
The Determinants of Foreign Direct Investment: A study based on country-level...Yi Zhang
This document is a master's thesis that examines the determinants of foreign direct investment (FDI) using country-level panel data. It begins with an introduction that notes the rapid growth of FDI in recent decades and outlines the research questions. A literature review then discusses previous research on potential factors that influence FDI. The paper will use regression analysis to investigate the effects of various economic, institutional and policy variables on FDI inflows. It will also include regional dummy variables to analyze differences in FDI patterns across geographic regions. The results aim to identify which factors cause variation in FDI levels among countries and how these factors impact FDI.
The study is on the effect of Net capital inflow on inclusive growth in Nigeria. This study seeks to deepen the understanding on how capital inflow creates opportunity for inclusive growth in Nigeria through increase in GDP per capita. The objective of the study were to : determine the effect of Net capital inflow , Net foreign direct investment and trade openness on inclusive growth in Nigeria. The study employed the time series data in its analysis. The period of analysis spanned through 1980-2015 and the dataset required for the analysis were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and National bureau of statistics publications. The study conducted trend analysis, descriptive analysis. The data were also tested for stationarity using the Augmented Dickey Fuller (ADF) unit root test and Ordinary Least Square (OLS) analytical techniques, cointegration test and error correction mechanism. It was evident from the unit root test that the variables were fractionally integrated while the cointegration test reveals that long run relationship exists among the variables. The findings equally reveal that capital inflow exerts significant negative influence on GDP per capita. This could be attributed to the problem of managing external capital flows which has been sub-optimal in most developing economies including Nigeria. The implication of this finding is that the perceived benefits that are associated with capital inflows tend not to hold sway in Nigeria over the sampled period which may be attributed to institutional and governance failure. Owing to the findings, this study recommends for the adoption of investment friendly policies and ensure transparency and good governance, appropriate economic management practices capable of supporting reforms in the Nigerian financial system and guide international capital inflows to ensure that the associated economic turnarounds are people-centered.
This document analyzes the determinants of foreign direct investment (FDI) in Malaysia's manufacturing industry from 1980-2002. It finds:
1) Malaysia received substantial FDI over this period, which was an important driver of its economic growth and industrialization.
2) An econometric analysis using cointegration and fully-modified least squares methods found that increases in education, infrastructure, market size, and current account balance led to increases in FDI, while increases in inflation and exchange rate led to decreases.
3) Major sources of FDI in Malaysia's manufacturing sector included the US, Japan, Germany, and Singapore, with electrical/electronics, petroleum, and chemicals as top recipient industries.
Understanding the Determinants and Impacts of FDI Inflows - An Indian Perspec...Jitender Barna
This document summarizes a student's research on understanding the determinants and impacts of foreign direct investment (FDI) inflows into India. The student examines various economic theories on what drives FDI and reviews previous empirical studies. The methodology section outlines how the student uses a positivist philosophy and deductive approach, collecting secondary data to conduct regression analysis and correlation tests. The findings section indicates that GDP, imports, exports, and exchange rates are significant determinants of FDI in India. While FDI is found to positively impact GDP, capital formation, imports and savings, the magnitude of impact is less than that of domestic capital formation. In conclusion, the student finds that India has not yet received sufficient FDI to significantly impact the
Determinants of Foreign Direct Investment (FDI) in Malaysia: What Matters Most?Nursuhaili Shahrudin
1. The study examines the determinants of foreign direct investment (FDI) inflows to Malaysia from 1970 to 2008 using the autoregressive distributed lag (ARDL) framework.
2. The results suggest that financial development, as measured by money supply, and economic growth, as represented by GDP, have a positive impact on FDI inflows to Malaysia in the long run.
3. A developed financial system and high economic growth rate help create a favorable environment for foreign investors and are important for attracting FDI to Malaysia.
Analysis of foreign investment and identified macroeconomic measures in nigeriaAlexander Decker
This document analyzes the relationship between foreign investment and macroeconomic variables in Nigeria from 1980-2010. It finds that GDP, exchange rates, and money supply have a direct positive impact on foreign investment, while interest rates and inflation have a negative impact. Interest rates and inflation are also found to "Granger cause" foreign investment, indicating they are influential factors. The study recommends that Nigeria implement excellent macroeconomic policies and infrastructure development to enhance investment and reduce poverty.
Modelling the Long Run Determinants of Foreign Portfolio in NigeriaMoses Oduh
1) This study examines the long-run determinants of foreign portfolio investment in Nigeria from 1981-2010 using time series analysis.
2) It finds that foreign portfolio investment has a positive long-run relationship with market capitalization and trade openness in Nigeria.
3) The study aims to help policymakers pursue policies that can attract more foreign portfolio investment in the long run, such as efforts to improve and sanitize the Nigerian capital market.
The aim of this study is to examine the impact of international capital flows on the economic growth in Jordan during the period from 2005 to 2017, The study also examines trends and composition of capital inflows. The study used descriptive analytical research method which was appropriate for the purpose of research. By using time series data, the study found that Foreign Direct Investment (FDI), foreign portfolio investment (FPI), grants (Gr) and Worker remittances (WR) are positively affecting the economic growth direct contribution. Based on the research results, the study came with a several recommendations, the most important recommendation is; the government of Jordan should create and relax the rules and regulations to attract more investors, and also the government should work hand in hand with the developed countries to create economic and employment opportunities, improve the country’s competitiveness, and expand growth within the private sector so that everyone in Jordan has the opportunity to contribute to a brighter future.
This document summarizes a study on the impact of foreign direct investment (FDI) inflows on the Indian stock market. The study analyzed data on annual FDI inflows to India from 2001 to 2011 and the corresponding values of the BSE Sensex and CNX Nifty indices. Statistical analysis showed a strong positive correlation between FDI inflows and both indices, with the FDI inflows explaining around 82% of the variation in the indices. The study concluded that trends in FDI inflows to India have a dependent relationship with trends in the two stock market indices.
1) The document discusses capital market liberalization in Uganda and its potential to promote sustainable economic growth. It provides historical context on Uganda's economic reforms and development of its financial system.
2) It analyzes trends in Uganda's investment climate, sources of investment capital, and weaknesses in its financial system compared to other African nations. Capital market liberalization could help attract more domestic and foreign investment, but risks must be carefully mitigated.
3) The document concludes that a well-regulated implementation of capital market liberalization may produce slow but steady growth in Uganda by diversifying financial instruments and increasing access to capital, especially for small businesses, but social factors must also be considered.
Abstract:Savings are necessary if investment, and hence economic growth and development are to be stimulated. The paper looks at the broad set of possible determinants of private savings in Lesotho using annual time series data for the period 1980-2010. The paper estimates the saving rate function and Error-Correction modelling is used to avoid spurious results. The results indicate that public savings are important in explaining changes in private savings, both in the short-run and long-run and that the terms of trade negatively influence private savings in Lesotho in the long-run.
Foreign capital flows depends on the prevailing monetary forces as supported by capital flows
theory and the mechanism linking these two variables is that contraction of net domestic assets through an
open market sale of bonds will place upward pressure on domestic interest rates. Higher interest rates attract
foreign funds, generating a capital inflow which relieves the pressure on domestic interest rates. Has this
actually happened? It is against this backdrop that the present study investigated the impact of monetary policy
on international capital inflows in Nigeria for a period of 22 years (1994-2015) using time series data. The
autoregressive distributed lag technique revealed that the short-run and long-run significant determinants of
foreign capital inflows are largely from broad money supply, nominal exchange rate, inflation rate and interest
rates spread except inflation rate that is insignificant in the long-run. This outcome upholds theoretical
prediction. Long-run equilibrium relationship was found between the dependent variable and the regressors.
Further examination of the short run dynamics of the model showed that the speed of adjustment coefficients
ECM (-1) to restore equilibrium have a negative sign and statistically significant at 1% level, ensuring that
long-run equilibrium can be attained and about 89% of the short-run deviation from the equilibrium (long-run)
position is corrected annually to maintain the equilibrium. Since the empirical evidence revealed that monetary
aggregates such as broad money supply, nominal exchange rate, inflation rate and interest rates spread
influence foreign capital inflows, it is therefore recommended that government should continue to pursue
expansionary monetary policy and foreign exchange policies that would ensure competitiveness of the
economy in order to attract the much needed foreign capital inflows that would engender economic growth.
The document discusses a study investigating the impact of foreign direct investment (FDI) on economic growth in Pakistan from 1990-2006. The study uses a production function model including FDI, trade, domestic capital, labor, and human capital as independent variables affecting economic growth. The expected results are a statistically significant positive relationship between real per capita GDP and FDI in Pakistan. Policy recommendations could then be made regarding FDI in Pakistan based on the results.
Foreign Direct Investment. Political Economic Digest Series - XVIAkash Shrestha
In this issue, we will be discussing about Foreign Direct Investment (FDI).
Foreign Direct Investment has been a very productive tool for the economic growth of many countries. Recently after the government made the decision to celebrate 2012/13 as investment year and after the agreement with India i.e. Bilateral Investment Promotion and Protection Agreement, the topic of Foreign Direct Investment has been highly discussed among the lawmakers, policymakers and general public. The examples provided in this issue of different countries regarding FDI has shown how the growth rate is positively affected by the investment from outside the country.
FDI as A Source of External Finance to Developing Countries: A Special Refere...iosrjce
In this era of increasingly globalized world economy, FDI is particularly a significant driving force
behind the interdependence of national economies and is considered as the main source of external finance. The
considerable decline in official development assistance (ODA) and commercial bank lending to developing
countries, which are considered as the main sources of meeting the external financing needs of developing
countries, have seen a greater reliance on private capital especially foreign direct investment as a source of
development finance. This is because of the fact that FDI not only remains much less volatile than portfolio and
other investments but it has also proved to be resilient enough during East Asian crisis of 1997-98 and the
Mexican crisis of 1994-95. In view of this growing significance of foreign direct investment, this paper aims to
study the role of FDI in external financing to developing countries, particularly India and China and the
benefits of combining FDI with other private sources of external finance. The paper concludes that FDI is the
major source of external finance for developing economies not only in absolute terms but also relative to other
sources of private capital flows, contributing on an average more than half of net private and official flows
during the period under review. The findings also presented a completely different picture with regard to the
structure of external financing for India and China. For China, FDI is the major external source of finance
followed by debt. On the other hand, for India Workers’ Remittances is the major source of external finance
followed by debt. The paper further concludes that China and India are the first and third most developing
country destinations for investment flows respectively and both are vying with each other to attract more and
more FDI inflows.
This document summarizes key points from a lecture on bivariate distributions:
1. It introduces bivariate distributions, which involve two related random variables, as opposed to univariate distributions which involve a single random variable.
2. It discusses properties of the probability density function (pdf) for bivariate distributions, including how to calculate the marginal pdfs for each variable and their expectations.
3. It provides examples of calculating the bivariate cumulative distribution function and marginal distributions for specific bivariate distributions.
The document provides an overview of Indigo Group and their SIP technology and products. It discusses SIP protocol and how it works for real-time communications over IP networks. It describes network components like user agents, servers, and gateways. It also outlines different network configuration options and examples of SIP services like multimedia sessions and event notification.
El documento proporciona información demográfica sobre el municipio de Puebla en México. Detalla que la población total es de aproximadamente 5.8 millones de personas, con más mujeres que hombres. Además, reporta las cifras de nacimientos, defunciones, matrimonios y divorcios para el año 2012. La información fue recopilada por Mario Alberto Aponte del Moral.
Makalah ini membahas tentang reaksi adisi dan eliminasi. Reaksi adisi adalah reaksi penambahan atom atau gugus atom pada ikatan rangkap sehingga ikatan rangkap berubah menjadi ikatan tunggal, sedangkan reaksi eliminasi adalah reaksi pelepasan dua substituen dari molekul yang menghasilkan ikatan rangkap. Terdapat dua mekanisme eliminasi, yaitu E1 yang terdiri dari dua langkah dan E2 yang terjadi
This document discusses the opportunities and challenges of using Web 2.0 technologies in education. It defines Web 2.0 as technologies that enable user collaboration, communication, and content creation through social software like wikis, blogs and social networks. The document outlines how Web 2.0 allows new forms of learning through collaboration, publishing, and exploring online. However, it also notes challenges like students becoming distracted or disconnected from offline learning. Finally, it proposes that Education 2.0 could reimagine teaching by leveraging Web 2.0 tools to change teacher and student roles, institutional structures, and curriculum design.
Micron Technology is entering into agreements to acquire Qimonda AG's 35.6% ownership stake in Inotera Memories, Inc. for $400 million. The acquisition will occur in two stages, with Micron purchasing around 18% of Inotera for $200 million within a week, and the remaining around 18% upon regulatory approval. After the acquisition, Micron and Nanya Technology Corporation will enter new agreements to jointly operate Inotera. Micron also obtained $285 million in financing to fund the second stage of the acquisition. The transaction will increase Micron's competitiveness by providing access to Inotera's manufacturing capacity and technology.
This document outlines Sony's product catalog, including televisions and projectors, home theater systems, computers and peripherals, and memory cards. It provides keywords for customers searching online about Sony's Bravia televisions, projectors, Blu-ray and DVD home theaters, laptops, accessories, and memory cards.
This document outlines a 5-day resistance training program for a 19-year-old female client. On Mondays, Wednesdays, and Fridays, the program focuses on upper body exercises like pushups, bench press, and rows. Tuesdays and Thursdays target lower body with squats, lunges, and hamstring curls. Each day includes 2-3 sets of 8-12 reps of various exercises. The program aims to tone muscles through higher reps rather than build bulk. Stretching is recommended after each workout focusing on muscles trained that day.
Social Media Strategic Creative ApproachSameer Issa
The document discusses a coffee shop and restaurant business that is seeking to increase its customer base through social media engagement. It analyzes the brand's core competencies which include offering a unique social experience through its warm, friendly atmosphere. Customers describe their experience as friendly, comfortable, relaxing and social. The business has opportunities for social branding by capitalizing on its strengths of creating a cozy home-like setting and quality food/drinks at reasonable prices. The strategic focus is on how to leverage its competitive edge of the social experience through social media engagement.
The document discusses using computers in learning. It provides an introduction to e-learning concepts and tools. It explains how technology can influence learning when used as a teaching method. It invites participants to practice designing their own teaching slides and media to use. The agenda includes an introduction to e-learning tools, a lab session to practice using them, and a discussion on teacher practices using technology. It defines e-learning and discusses how technology supports teaching and learning through expanded materials, engagement, and accessibility. It also introduces SlideShare as a tool for sharing presentations online.
UTE Problemas frecuentes del Desarrollo Apego-AnsiedadSilvana Perez
Este documento discute los problemas de desarrollo del apego y la ansiedad. Explica que un apego seguro con la madre o cuidador principal es importante para que un niño desarrolle confianza. Una atención irregular o falta de afecto puede causar estrés, ansiedad y dificultades de aprendizaje en los niños. Los niños sin afecto tienden a ser pasivos y falta de iniciativa.
Powerpoint on Survey Development in libraries by LIS 2830 students Dana Alsup, Katie DeRusso, Michele Farina,
Sarah Loudenslager, Sara Tekavec (Spring 2011).
The document discusses the harms of smoking and argues it should be illegal. It notes smoking tobacco contains over 7,000 chemicals, with 70 known to cause cancer. Smoking is the number one risk factor for lung cancer and is also linked to many other forms of cancer throughout the body. Each year in the US over 430,000 people die from smoking-related illnesses and it costs billions in healthcare. In conclusion, the document argues smoking should be banned due to the significant harm it causes smokers and those around them.
External debt, economic growth and investment in nigeriaAlexander Decker
This document summarizes a study that examines the impact of external debt on economic growth and investment in Nigeria from 1980 to 2008. The study uses debt-cum-growth and investment models and multiple regression analysis. The results show a positive relationship between external debt, economic growth, and investment, with a high coefficient of determination of about 79.8%. However, private investment, a measure of real development, shows a decline. The study recommends that government ensure borrowed funds are used optimally to avoid economic crises and reduce private investment, which is key to growth.
Foreign Portfolio Investment and Human Capital Development in Nigeria 1987 2018ijtsrd
As a result of low savings that characterize their economies, most developing economies scramble for international capital inflows to fill the void in their domestic savings. The international capital can take the form of Foreign Portfolio Investment. There are mixed and conflicting results in past studies on the effect of Foreign Portfolio Investment on Human Capital Development in Nigeria which this study will attempt to resolve. Foreign portfolio investment FPI is an aspect of international capital inflows and involves the transfer of financial assets such as cash, stock or bonds across international borders in want of profit. The main objective of this study is to explore, determine, assess, examine and ascertain the effect of FPI on human capital development in Nigeria. The specific objectives of this study are to explore, determine, assess, examine and ascertain the effects of foreign portfolio investment, market capitalization, exchange rate and interest rate respectively on human capital development in Nigeria. The study adopted ex post facto research design and sourced data sourced data from the Central Bank of Nigeria Statistical Bulletin and Annual Reports and the World Bank Development Indicators which were analyzed using Descriptive Statistics, Augmented Dicker Fuller tests for unit roots and Autoregressive Distributive Lag ARDL for the hypothesis.The study concluded that foreign portfolio investment has both short run and long run positive and significant effects on human capital development. Hence, it is recommended that government should strengthen and deepen the capital market system in Nigeria to sustain existing foreign portfolio investment and attract new ones. Mbanefo Patrick Amaechi "Foreign Portfolio Investment and Human Capital Development in Nigeria: 1987-2018" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-2 , February 2022, URL: https://www.ijtsrd.com/papers/ijtsrd49231.pdf Paper URL: https://www.ijtsrd.com/management/management-development/49231/foreign-portfolio-investment-and-human-capital-development-in-nigeria-19872018/mbanefo-patrick-amaechi
To what extent foreign direct investment (fdi) affect in economic development...Alexander Decker
This document discusses research on the impact of foreign direct investment (FDI) on Pakistan's economic growth from 1975 to 2010. It finds that FDI has had a positive effect on economic growth in both the short and long run. The document reviews previous literature on the relationship between FDI and economic growth. It then describes the methodology used in the study, which analyzes the impact of FDI, reserves, inflation, and gross domestic savings on GDP. The results show that all variables are positively correlated with FDI and statistically significant. The conclusion is that FDI contributes to Pakistan's economic growth.
Foreign Investment and Its Effect on the Economic Growth in Nigeria: A Triang...iosrjce
Evidence abound about the registered increase in foreign investment inflows in recent years. While
proponents emphasize that these inflows could engender economic growth, critics express concern that there
could be destabilizing effect on the economy if not well managed. This study therefore, attempts to examine the
effect of foreign investments (disaggregated into foreign direct investment and foreign portfolio investment)
inflows on economic growth in Nigeria with a view to ascertaining the better contributor, using time series data
from 1987-2012. The OLS and the Granger causality procedures were employed in analyzing the data. The
result displays that both foreign direct investment and foreign portfolio investment have positive and significant
effect on economic growth though the partial correlation coefficients show that foreign portfolio investment is
the better contributor. Based on the result, government should pursue policies that encourage both foreign
direct investment and especially foreign portfolio investment.
5.[34 42]effect of foreign direct investment and stock market development on ...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. It finds that both FDI and lagged stock market development have a small but statistically significant positive effect on economic growth. The results support the argument that extractive FDI and stock market development enhance growth. However, both FDI and stock market development show cyclical movements over time. Lagged exchange rate appreciation is also found to positively impact growth in Nigeria. The study aims to fill a gap by examining the joint impact of FDI and stock market development on growth, which has not been the focus of prior research on Nigeria.
Foreign Direct Investment and Human Capital Development in a Developing Afric...ijtsrd
This document summarizes a research paper that examines the effect of foreign direct investment (FDI) on human capital development in Nigeria from 1987 to 2018. It begins with background on FDI and human capital development. It then reviews literature on the relationship between FDI and economic growth. The study uses data from the Central Bank of Nigeria and World Bank to analyze the long-run and short-run effects of FDI and other factors like exchange rates on human capital development in Nigeria, finding that FDI has a positive short-run effect but no long-run effect. It recommends that Nigeria reduce reliance on FDI and focus it on short-term plans only.
Running head THE EFFECTS OF FOREIGN DIRECT INVESTMENT1PAGE .docxtodd521
Running head: THE EFFECTS OF FOREIGN DIRECT INVESTMENT
1
PAGE
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THE EFFECTS OF FOREIGN DIRECT INVESTMENT
The Effects of Foreign Direct Investment and Foreign Aid on Gross Domestic Product in Developing Countries: A Case for the Democratic Republic of the Congo
25/25
Author Note
Mathew A. Schulz, Department of Economics, Salem State University.
Mathew A. Schulz will be attending Boston University for his master’s degree in city planning, focusing on development and public policy. Correspondence concerning this article should be addressed to [email protected]
Abstract
Prompting this analysis was the International Monetary Fund’s 2010 report of gross domestic product purchase power parity per capita, where the Democratic Republic of the Congo (D.R. Congo) ranked last, at a meager $328 (U.S.) annually. With the recent debates concerning whether or not sub-Saharan African countries have benefited from capital inflows, this paper explores the effects of foreign direct investment and foreign aid on the D.R. Congo’s gross domestic product. In the D.R. Congo, empirical evidence suggests that a slight positive correlation exists between capital inflows and gross domestic product. However, due to the volatility of foreign direct investment and aid, comprehensive policies promoting economic and political stability should be examined.
The Effects of Foreign Direct Investment and Foreign Aid On Gross Domestic Product in Developing Countries: A Case for the Democratic Republic of the Congo
The history of the effectiveness of capital inflows to Africa has raised much debate as to whether or not any contributions have increased development. The literature overviews of the area, particularly in regards to sub-Saharan Africa (SSA), have identified many determinant variables of growth. Highlighting several forms such as foreign direct investment (FDI), official development assistance (ODA), domestic savings, improved infrastructure, debt relief, and reinvestment, among others, many economists conclude that the first two are most important for increasing economic growth. It is FDI and foreign aid (AID), both external sources, which benefit economic expansion in less developed countries (LDCs). This phenomenon, despite not always being true, has gained recent momentum. According to Collier and Gunning (1999) their study for the period between 1960-1989 found one explanatory variable, investment to GDP ratio, statistically significant in explaining growth in Africa. They concluded that African countries with higher investment to GDP ratios had higher economic growth rates. Another study, Loots (2003) found similar results. The study, covering the period from 1995-2000, found that per-capita growth during the period was directly related to external capital inflows. In particular, Loots (2003) noted that FDI and ODA flows were important in understanding the growth of African countries in the mid to late 90s.
The objectiv.
External Trade Benefits and Poverty Reduction in English Speaking West Africa...iosrjce
This research examines the impact of external trade benefits on poverty reduction in five English
Speaking West African Countries (ESWACs) from 1980 to 2013. These countries include; The Gambia, Ghana,
Liberia, Nigeria and Sierra Leone). The study expressed external trade benefits (ETB) as increase in export
earnings (EXE), trade openness (TOP), total government expenditure (TGE) and reduction in foreign exchange
rate (FER), while poverty level is expressed as real gross domestic income (GNI) per capita current US Dollar.
Theoretically, the study relied on five trade theories, in practice; the study constructs a balanced panel data
structure (BPDS) and methodologically, departs from the classical OLS and 1st generation panel econometric
techniques to adopting recently developed 2nd generation panel data econometric methods. The results of the
study reveal that external trade benefits were not found to be significant enough to reduce the poverty level in
ESWACs from 1980 to 2013.This impliesthat external trade benefits did not significantly increase GNI per
capita in ESWACs within the period of study. Based on this result, the study therefore concluded that the impact
of external trade benefits on poverty level is a trivial matter because external trade benefits have not
comprehensively and significantly augmented the status of real gross domestic income (GNI) percapital
currentUSDollar of English speaking West African countries within the period of study. Following this
conclusion we recommended, among others, that policy implication on the result of co-integration of the panel
equation 2 is that more credible expansionary fiscal policy should be pursued as this will help to pump more
money into circulation with the aim of creating and expanding employment opportunities that would be able to
reduce poverty in the region and cut in public investment spending on agriculture and industrial sectors should
be avoided so that the countries will be encouraged to produce locally and also export.
Budget Deficit and Economic Growth in Liberia: An Empirical InvestigationAJHSSR Journal
: This paper investigates the relationship between budget deficits and economic growth in Liberia.
The study employed: the Classical Ordinary Least Squares Technique (OLS); The Augmented Dickey Fuller
(ADF) and Phillip Perron unit root tests for stationarity; the Co-integration test using Engle-Granger Two-Step
procedure (EGTS); and a parsimonious Error Correction Model of the relationship between Budget deficit and
economic growth in Liberia. It is evident from the analysis that there exists a long run relationship between Budget
deficit and economic growth in Liberia. There also exists a positive and significant relationship between Budget
deficit and economic growth in Liberia. Therefore, a 1.0 percent increase in deficits will result in an increase of
approximately 0.42 percent in economic growth in Liberia. The study recommends that government, policy makers
and the monetary authorities should ensure an appropriate mix of monetary and fiscal policies such that would
deliberately and strategically maximize the growth potentials of deficits in Liberia.
JEL Classification : C2, E1, E2, O4, O5
KEYWORDS: Budget Deficit, Economic
External Financing and Economic Growth in Nigeria 1986 2017ijtsrd
External financing has become a veritable resort to remedying the common problems of low productivity, low productivity, low savings and high dependent on consumption from exports in most less developed economies. The use of external finance is believed to have the capacity to close wide gap between domestic savings and investment and provide the complementary funds to facilitate economic activities necessary for growth in Nigeria. This study aimed to investigate the effect of external financing on economic growth in Nigeria between 1986 and 2017. External financing was captured using five variables of external debt stock EDS , foreign direct investment FDI , official development assistance ODA , remittance RMT and foreign portfolio investment FPI , as the independent variables, regressed on economic growth represented by annual growth rate of gross domestic product GDPR as the dependent variable. Data for these variables were obtained from World Development Indicator, and analyzed based on the Autoregressive Distributive Lag ARDL approach. The findings revealed that, in the long run, EDS and FDI had a negative and a positive, significant effects, respectively, while others had no effect on growth in the short run, all the external financing variables EDS, FDI, FPI, ODA, and RMT had no significant effect on economic growth in Nigeria. The study averred that FDI is a veritable source of financing that can bring about economic sustainability to Nigeria. The study recommended, among others, that government should deploy external debts for regenerative projects that will eventually liquidate themselves in the long run. Ekwunife, Ifeanyi Jude | Dr. J. J. E. Ikeora "External Financing and Economic Growth in Nigeria: 1986-2017" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-6 , October 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29388.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/29388/external-financing-and-economic-growth-in-nigeria-1986-2017/ekwunife-ifeanyi-jude
The impact of interest rates on the development of an emerging market empiric...Alexander Decker
This document summarizes a journal article about the impact of interest rates on the development of emerging markets, using Nigeria as an empirical case study. It acknowledges people who assisted with the research. The abstract indicates that interest rates are difficult to forecast and impact borrowing costs for businesses. While higher rates could encourage savings in the long-run, current high rates in Nigeria of 12% are negatively impacting growth. The literature review discusses how inflation can stimulate or deter human capital formation and how interest rates influence savings, investment, and financial intermediation. It recommends Nigeria adopt pragmatic policies to reduce lending rates to single digits to boost the economy.
This is a lirature review sourced from Internet. It is not minezerfudimd
This document discusses the Two-Gap model of economic growth in Nigeria from 1970-2007 using vector autoregression analysis. It finds that foreign aid does not have a clear positive impact on economic growth in Nigeria, while foreign direct investment (FDI) does, but is volatile. The study also finds that filling trade gaps determined by aid requirements alone will not necessarily boost trade and growth. It reviews literature on the relationship between FDI and economic growth, finding mixed evidence. Determinants of FDI identified include market size, infrastructure, political stability, natural resources, and macroeconomic policies.
The crowding out effect of budget deficits on private investment in nigeriaAlexander Decker
This document discusses a study examining the crowding out effect of budget deficits on private investment in Nigeria. Some key points:
- Nigeria has experienced high and persistent budget deficits for many years, averaging over 10% of GDP from 2009-2012. These deficits are financed through borrowing which reduces the funds available for private investment.
- The study uses an econometric model and tests including OLS and Granger causality to analyze the relationship between private investment, budget deficits, and other variables like external debt, inflation, and exports.
- The results confirm that budget deficits crowd out private investment in Nigeria. A 1% increase in the deficit leads to a 54% decrease in private investment. The study also finds a
Impact of Foreign Debt on Economic Growth in Zimbabweiosrjce
The study investigates the impact of foreign debt on economic growth in Zimbabwe. Time series data
covering the period 1980 -2013 is analysed using ordinary least squares regression. Labour force, capital
investment, and trade openness are used as control variables. The results show that external debt and trade
openness impact negatively on economic growth in Zimbabwe while capital investment and labour force growth
has a positive effect. The study recommends that the country should not heavily rely on foreign borrowing to
finance economic growth but should rather create a conducive environment for alternative sources of foreign
funds such as project finance and foreign direct investment. It is further recommended that the country should
curb excessive imports of consumables and encourage value-added exports by local manufacturers.
The document outlines the AK model of economic growth proposed by Frankel in 1962 and evaluates its relevance to developing countries like Zimbabwe. The AK model emphasizes capital accumulation and assumes technological progress occurs endogenously through learning by doing. It predicts capital accumulation will increase productivity and growth. The model is relevant for developing countries in promoting industrialization and reducing unemployment. However, it may fail to achieve desired results as it does not consider other important factors like political stability and strong institutions. It is also too general and does not provide specific policy prescriptions tailored to individual country contexts.
This study analyzed time-series data from 1971-2011 on Nigeria's gross national product (dependent variable) and three independent variables: public expenditure, debt, and reserves. Using a Keynesian model, it found that the Nigerian economy is solvent and sustainable, with a positive relationship between public income, expenditure, and reserves, but a negative relationship between public income and public debt. It recommends increasing and judiciously using external debt, as well as distributing some public reserves proceeds to traditional financial institutions, to achieve Nigeria's economic objectives. However, it notes potential limitations of corruption and marginalization if recommendations are implemented.
Impact of openness, foreign direct investment, gross capital formation on eco...Alexander Decker
This document summarizes a study that assessed the impact of openness, foreign direct investment, and gross capital formation on economic growth in Kenya from 1960 to 2010. A multiple linear regression model was used to analyze data from the World Bank. The findings showed that trade openness had a positive and significant impact on GDP growth. However, foreign direct investment and gross capital formation did not have a significant effect on GDP growth. The study recommends that policymakers in Kenya emphasize increasing trade openness to promote economic growth.
Foreign Aid and Economic Growth in the West African States: A Panel Frameworkinventionjournals
This paper examines the impact of economic variables namely, foreign direct investment (FDI), investment, export, foreign aid and broad money supply on economic growth, approximated by gross domestic product (GDP)using annual data covering a period 1981-2008 on a group of West African countries. The impact of variables on GDP is estimated using three panel estimation models: pooled model (pooled), fixed effects model (FEM) and random effects model (REM). We explore the hypothesis that foreign aid can promote growth in developing countries. We test this hypothesis using panel data series,while the findings of previous studies are generally mixed, our resultsindicate that foreign direct investment has purely positive effects on economic growth in West African countries
Corporate Governance : Scope and Legal Frameworkdevaki57
CORPORATE GOVERNANCE
MEANING
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Genocide in International Criminal Law.pptxMasoudZamani13
Excited to share insights from my recent presentation on genocide! 💡 In light of ongoing debates, it's crucial to delve into the nuances of this grave crime.
Safeguarding Against Financial Crime: AML Compliance Regulations DemystifiedPROF. PAUL ALLIEU KAMARA
To ensure the integrity of financial systems and combat illicit financial activities, understanding AML (Anti-Money Laundering) compliance regulations is crucial for financial institutions and businesses. AML compliance regulations are designed to prevent money laundering and the financing of terrorist activities by imposing specific requirements on financial institutions, including customer due diligence, monitoring, and reporting of suspicious activities (GitHub Docs).
सुप्रीम कोर्ट ने यह भी माना था कि मजिस्ट्रेट का यह कर्तव्य है कि वह सुनिश्चित करे कि अधिकारी पीएमएलए के तहत निर्धारित प्रक्रिया के साथ-साथ संवैधानिक सुरक्षा उपायों का भी उचित रूप से पालन करें।
Pedal to the Court Understanding Your Rights after a Cycling Collision.pdfSunsetWestLegalGroup
The immediate step is an intelligent choice; don’t procrastinate. In the aftermath of the crash, taking care of yourself and taking quick steps can help you protect yourself from significant injuries. Make sure that you have collected the essential data and information.
It's the Law: Recent Court and Administrative Decisions of Interest
A033201014
1. International Journal of Humanities and Social Science Invention
ISSN (Online): 2319 – 7722, ISSN (Print): 2319 – 7714
www.ijhssi.org Volume 3 Issue 3 ǁ March. 2014ǁ PP.01-14
www.ijhssi.org 1 | P a g e
The Two Gap Model and the Nigerian Economy; Bridging the
Gaps with Foreign Direct Investment. .
1,
Bakare Aremu , Tunde Abubakar , 2,
Bashorun, oladipo titilayo
1,
Department Of Economics , University of Lagos, Akoka, Yaba ,Lagos
,2
Department Of Finance , University of Lagos, Akoka, Yaba ,Lagos
ABSTRACT : Holis Chenery (2005) proposed existence of 2-gaps in LDCs in his TWO GAP MODEL.
This research work sought to unveil the existence of the gaps in the Nigeria economy. We realized that domestic
savings was insufficient to fund required investment in Nigeria (i.e. S ≠ I).This implies existence of savings gap,
also we found that disequilibrium exist in external balance (i.e. X ≠ M), which imply that exchange rate gap
equally exist. We sought the impact of these two gaps on economic performance in Nigeria and if FDI could be
a bridge, through error correction mechanism, the results revealed that, the two gaps retard economic
performance, and that FDI is a bridge but not sufficient in the short run and not reliable in the long as it
promote importation in both periods, which could widen the existing exchange rate gap. We discovered from
disaggregation of balance of payments that exchange rate gap oil (EXRGAPO i.e. balance of trade oil) should
have been a source of exchange rate appreciation but the price is always quoted in U. S dollars (X0 - M0). In
addition we found that FDI in Nigeria supports export promotion and not import substitution and that exchange
rate gap still persist in the long run but saving gap eroded. We therefore recommended that Government should
attract more FDI by providing enabling environment through political and social stability and development of
adequate infrastructures, provision of employment opportunity which would increase output, income, and
savings and through multiplier effect generate further employments.
KEY WORDS: 2-Gap Model, Foreign Direct Investment, Import, Export, Savings, Investment, Gross
Domestic Product.
I. INTRODUCTION
Globally, there exist no economy that is self-sufficient, even autarky does not imply absence of trade
between a particular nation and the rest of the world but rather a minimum external trade relationship (i.e.
Minimum (X-M)).Trade between Nations is more beneficial to some countries than the others. It has however,
been argued that the developed world accentuates higher gains than the developing counterparts. This is because
of their technological advancement which spurred their large scale production of both consumables and capital
goods (developing countries, Nigeria inclusive are rather seen as an extension of their domestic markets rather
than trading partners). This gains that skewed „mostly‟ to the developed world left most of developing Nations
with what Holis Chenery called exchange rate gap constraint (X-M≠0 ;mostly<0 ), to worsen the situation
domestic savings that‟s supposed to be a succor to the aforementioned is grossly insufficient with their (LDCs)
marginal propensity to consume approaching unity. This refers to as savings gap (i.e. S-I ≠0 but rather S-I<0).
Holis Chenery et al (2005)1
, illustrated the “two – gap” approach to economic development. The idea is that
“Savings – gap” and “foreign exchange gap” are two separate and independent constraints on the attainment of a
target rate of growth in LDCs. Chenery sees foreign aid (Investment) as a way of filling these two gaps in order
to achieve the target growth rate of the economy.To measure the size of the gaps, a target growth rate of the
economy is recommended along with a given capital output ratio. A savings gap arises when domestic savings
rate is less than the investment required to achieve the target. e.g. if the growth target of national real income is
7 percent per annum, and the capital – output ratio is 3:1, then the economy must save 21% of its national
income to achieve this growth target. If only 15 percent of savings can be mobilized domestically, the savings
gap is 6 percent of the national income. The economy can achieve the target growth rate by filling this savings
gap with foreign aid (investment). In the same vein, a fixed relationship is postulated between targeted foreign
exchange requirements and net export earnings. If net export earning falls short of foreign exchange
requirements, a foreign exchange gap appears which can be filled by foreign aid (investment) In a nutshell with
these two „horrible‟ gaps, would the developing Nations survives the heat of modern challenges of globalization,
liberalization etc. To this end, we strive to examine the extent to which Foreign Direct Investment (FDI) can be
a panacea to these Economy hullabaloos.
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STATEMENTS OF PROBLEM
Economics interdependency (trades, investment, aid etc.) among Nations of the world has cost and
benefits, and one of the costs of foreign trade to most less developed countries (LDCs) is the continuous balance
of payment disequilibrium which is due to lack of technological knowhow to produce producer goods and some
highly synthetic tradable consumables, consequently they have no better chance to compete in the emerging
world market. The result of this is exchange rate gap which could not be subdued with domestic savings that is
expected to stimulate domestic investment to counteract the BOP disequilibrium. With these two gaps, at least a
bridge is needed.
We therefore wish to investigate the impact of FDI in bridging these gaps in Nigeria.
OBJECTIVES OF STUDY
The major objective of this study is to seek the place of FDI in bridging the gaps created through
insufficient domestic savings to stimulate domestic investments (savings gap) and continuous and sustained
BOP disequilibrium.
Other objective includes;
[1] To determine if FDI in Nigeria support exportations (i.e export promotion) or decrease importation (import
substitution).
[2] To establish if long run relationship exit among the variables.
RESEARCH QUESTIONS
In other to arrive at a meaningful conclusion, this study seeks to find answers to the following questions.
[1] Are there truly gaps in Nigerian economy?.
[2] Is FDI a stimulant through which the Economy could get to equilibrium?.
[3] What does the FDI in Nigeria support, import substitution, or export promotion?
RESEARCH HYPOTHESES
The following are the research hypotheses,
H0: There is no gap in Nigeria economy
H0: FDI does not have any impact in bridging the gap (if exist)?
H0: FDI does not stimulate export neither does it promote import substitution.
METHODOLOGY
The research work employed econometrics model known as error correction mechanism through which the
following tests would be estimated;
Unit root test (for stationarity of time series data)
Cointegration test (for long term relationship)
Granger causality test (for cause and effect)
Techniques of analysis
Ordinary least squared regression analysis
Model specification
GDP = F (FDI, EXR, SAVGAP, EXRGAPB, EXRGAPT, EXRGAPO, EXRGAPNO)
(GOP) = β0 + β1 FDI + β2EXR + β3SAVGAP + β4EXRGAPB + β5EXRGAPT + β6EXRGAPO +
β7EXRGAPNO + Ut
A- Priori expectation.
β1, , β2, > 0 ; β3 , β4 , β5 , β6 β7 < 0 .
II. THE THEORETICAL UNDERPINNING AND EMPERICAL REVIEW.
THE THEORETICAL BACKGROUND
THE 2-GAP MODEL
Holis Chenery et al (2005) , have put the “two – gap” approach to economic development. The idea is
that “Savings – gap” and “foreign exchange gap” are two separate and independent constraints on the attainment
of a target rate of growth in LDCs. Chenery sees foreign aid (Investment) as a way of filling these two gaps in
order to achieve the target growth rate of the economy.To calculate the size of the gaps, a target growth rate of
the economy is postulated along with a given capital output ratio. A savings gap arises when domestic savings
rate is less than the investment required to achieve the target. e.g. if the growth target of national real income is
6 percent per annum, and the capital – output ratio is 3:1, then the economy must save 18% of its national
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income to achieve this growth target. If only 12 percent of savings can be mobilized domestically, the savings
gap is 6 percent of the national income. The economy can achieve the target growth rate by filling this savings
gap with foreign aid (investment). In the same vein, a fixed relationship is postulated between targeted foreign
exchange requirements and net export earnings. If net export earning falls short of foreign exchange
requirements, a foreign exchange gap appears which can be filled by foreign aid (investment)
The two gaps are explained in term of the national income accounting identities.
E – Y ≡ 1 – S ≡ M – X = F
Where E = National Expenditure; Y = National Output; NI= National Income; I = Investment; S = Savings, M
= Import; X = Export; F = Net Capital Inflow (Investment)(I – S) is the domestic saving gap and (M – X) is the
foreign exchange gap like the basic national income accounting identities, the two gap are always equal ex-post
in any given accounting period. But they may differ ex-ante because in the long run those who make decisions
about savings, investment, exports and imports are different people. So during the planning process, the plans of
savers, investors‟ importers and exporters are likely to be different. Ex-ante (or planned) investment is related to
the target growth rate of the economy.
The Harrod Model
Professor R.F. Harrod tries to show in his model how steady (i.e., equilibrium) growth may occur in the
economy. Once the steady growth rate is interrupted and the economy falls into disequilibrium, cumulative
forces tend to perpetuate this divergence thereby lending to either secular deflation or secular inflation.
The Harrod Model is based upon three distinct rates of growth, firstly, there is the actual growth rate represented
by G which is determine by the saving ratio and the capital-output ratio. It shows short-run cyclical variations in
the rate of growth. Secondly, there is the warranted growth rate represented by Gw which is the full capacity
growth rate of income of an economy. Lastly, there is the natural growth rate represented by Gn which is
regarded as „the welfare optimum‟ by Harrod. It may also be called the potential or the full employment rate of
growth.
The Actual Growth Rate, In the Harrodian model the first fundamental equation is:
GC = s
Where G is the rate of growth of output in a given period of time and can be expressed as ∆ Y/Y; C is the net
addition to capital and is defined as the ratio of investment to the increase in income, i.e., I/∆ Y and s is the
average propensity to save, i.e., S/Y. Substitution these ratios in the above equation we get:
The equation is simply a re-statement of the truism that ex post (actual, realized) savings equal ex post
investment.
The above relationship is disclosed by the behaviour of income. Whereas S depends on Y, I depend on the
increment in income (∆Y), the latter is nothing but the acceleration principle.
The Warranted Rate of Growth. The warranted rate of growth is, according to Harrod, the rate “at which
producers will be content with what they are doing.” It is the “entrepreneurial equilibrium; it is the line of
advance which if achieved, will satisfy profit takers that they have done the right thing”. Thus this growth rate is
primarily related to the behaviour of businessmen. At the warranted rate of growth, demand is high enough for
businessmen to sell what they have produced and they will continue to produce at the same percentage rate of
growth. Thus, it is the path on which the supply and demand for goods and services will remain in equilibrium,
given the propensity to save. The equation for the warranted rate is
GwCr = s
When Gw is the “warranted rate of growth” or the full capacity rate of growth of income which will fully utilize
a growing stock of capital that will satisfy the entrepreneurs with the amount of investment actually made. It is
the value of ∆Y/Y. Cr, the „capital requirements‟, denotes the amount of capital needed to maintain the
warranted rate of growth, i.e., required capital-output ratio. It is the value of I/∆Y, or C.s is the same as in the
first equation, i.e., S/Y.
The equation, therefore, states that if the economy is to advance at the steady rate of Gw that will fully utilize its
capacity, income must grow at the rate of s/Cr per year, i.e., S/Y.
The equation, therefore, states that if the economy is to advance at the steady rate of Gw that will fully utilize its
capacity, income must grow at the rate of s/Cr per year, i.e., Gw=s/Cr.
If income grows at the warranted rate, the capital stock of the economy will be fully utilized and entrepreneurs
will be willing to continue to invest the amount of saving generated at full potential income. Gw is therefore a
self-sustaining rate of growth and equilibrium path if the economy continues to grow at this rate it will follow
the equilibrium path.
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THE EMPERICAL REVIEW
Baharom et al (2008) carried out a study to examine the role of trade openness and foreign direct
investment in influencing economic growth in Malaysia during 1975-2005, using the Bounds testing approach
suggested by Pesaran et al. (2001). The empirical results demonstrate that trade openness is positively associated
and statistically significant determinant of growth, both in short run and the long run. The result also suggested
that foreign direct investment is positively associated in the short run and negatively associated in the long run,
both significantly. Besides these two variables, the other control variable namely exchange rate was also
significant in the short run as well as in the long run.Aktar, Ozturk and Demirci (2008) examined the impact of
Foreign Direct Investment, export, economic growth and total fixed investment on unemployment in Turkey for
the period of 1987-2007. The Johansen co integration technique was applied to determine long run relationship
between the variables. The empirical findings suggest that there are two co integrating vectors during the
concerned period of time in Turkey, which indicates the long run relationship, though all the variables were
found to affect the unemployment rate significantly.
Amano (2005) sets up four-variable VAR systems with error-correction mechanisms to search for
causal directions between output growth and investment; and between growth and exports for two periods
prewar and postwar, and for three countries, Japan, the U.S.A., and the U.K. The study found that in Japan,
economic growth was spurred by both investment and exports (particularly the former), but the accelerator-type
causality (from growth to investment) was not so strong. For the U.S.A., the study found that output growth was
relatively independent of investment and exports but, in the postwar period, the multiplier-accelerator interactive
process was seen to take place. In the U.K., the multiplier-accelerator interactions were seen in both periods.
Also, the effect of exports on growth was stronger in the prewar period than in the other.Pham Mai Anh (2008)
followed the structural VAR methodology and procedures used by Bradford and Chakwin (1993) to investigate
which factor were the main engine that drives Vietnam‟s economy since the country launched the Renovation.
“Doi Moi” in 1986. Two VAR models and four variables, GDP, investment, export and productivity, were used
to examine two hypotheses: export-led growth and investment-led growth. In the VAR model of export-led
growth, export was assumed to be an exogenous variable that was allowed to have effects on all other variables
but they are not allowed to impact export. Similarly, the second model treated investment as an exogenous
variable that was supposed to affect the other three variables but they are not allowed to interact with
investment.
The results of both models supported the investment-led growth hypothesis showing that investment
has been the main factor that determines Vietnam‟s economic growth over the past two decades. On the
contrary, the impacts of export implied in both models on the country‟s GDP growth appeared to be very small.
In addition, the results also did not support the expectation that investment or export helped to improve
productivity, which in turn promotes economic growth. This study found empirical evidence showing that
investment, rather than, export takes the key role in Vietnam‟s economic growth, but no evidence showing that
investment or export promotes economic growth.Kaushik et al (2008) used Johansen's co-integration analysis
and a vector error-correction model to investigate the relationship between economic growth, export growth,
export instability and gross fixed capital formation (investment) in India during the period 1971- 2005. The
empirical results suggested that there exists a unique long-run relationship among these variables and the
Granger causal flow is unidirectional from real exports to real GDP. For example, ceteris paribus, a 1% increase
in exports raises GDP by an estimated 0.42% in the long run.Sinha (1999) examined the relationship between
export instability, investment and economic growth in Asian countries using time series data and the co
integration methodology framework. The study found that most of the variables are non-stationary in their levels
and not co integrated. For Japan, Malaysia, Philippines and Sri Lanka,the study found a negative relationship
between export instability and economic growth but for (South) Korea, Myanmar, Pakistan and Thailand, the
study founds a positive relationship between the two variables. For India, it was found to be mixed results. In
most cases, economic growth was found to be positively associated with domestic investment. Miankhel,
Thangavelu and Kalirajan (2009) adopted a time series framework of the Vector Error Correction Models
(VECM) to study the dynamic relationship between export, FDI and GDP for six emerging countries of Chile,
India, Mexico, Malaysia, Pakistan and Thailand. Stationarity of the series with structural breaks was also.
Examined in the model. Given that these countries are at different stages of growth, they were able to identify
the impact of FDI and export on economic growth at different stages of growth. The results suggest that in
South Asia, there is evidence of an export led growth hypothesis. However, in the long run, they identified GDP
growth as the common factor that drives growth in other variables such as exports in the case of Pakistan and
FDI in the case of India. The Latin American countries of Mexico and Chile show a different relationship in the
short run but in the long run, exports affect the growth of FDI and output. In the case of East Asian countries,
they found bi-directional long run relationship among exports, FDI and GDP in Malaysia, while they found a
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long run uni-directional relationship from GDP to export in case of Thailand Carbajal, Canfield and De la Cruz
(2008) examined both the existence of causality, in the Granger Sense, and its direction between Gross
Domestic Product (GDP), Exports, Imports and Foreign Direct Investment in Mexico (FDI). GDP was broken
down into two sectors: industrial and services. The co integration methodology developed by Liu, Burridge and
Sinclair (2002) and the tests of structural changes, for the vector of co integration developed by Quintos and
Phillips (1993); and Quintos (1997, 1998) were applied. The estimation showed a stable and causal relationship
of FDI over variables such as the industrial GDP, Exports and Imports. However, the service sector tends not to
have a direct effect over investments. Notwithstanding that Mexico greatly benefits from FDI, as such those
benefits are triggered by Exports and the industrial GDP, variables that hold a stronger linkage with the
economic activity of the United States and not with the actual evolution of the Mexican economy
Ullah et al (2009) investigated Export-led-growth by time series econometric techniques (Unit root test, Co-
integration and Granger causality through Vector Error Correction Model) over the period of 1970 to 2008 for
Pakistan. In that paper, the results reveal that export expansion leads to economic growth. They also checked
whether there is unidirectional or bidirectional causality between economic growth, real exports, real imports,
real gross fixed capital formation and real per capita income. The traditional Granger causality test suggests that
there is uni-directional causality between economic growth, exports and imports. On the other hand Granger
causality through vector error correction was checked with the help of F-value of the model.
III. ANALYSIS AND INTERPRETATION OF RESULT
-2000000
0
2000000
4000000
6000000
8000000
10000000
12000000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
exrgapb
savgap
The graph showing relationships between exchange rate gap and savings gap.
The graph above shows an existence of foreign exchange gap constraint in Nigeria, it‟s more prominent and
dominant when compared with savings gap. It can also be seen that both gaps moves along the same path, such
that in the early period under consideration they are asymptotic to time axis(close to equilibrium) and later
became apparently positive after which it down swing meaning deficit and negative investment. This graph
clearly shows existence disequilibrium on National level of savings and investment, and that of export and
import.
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Fig. 2: The graph showing relationships between exchange rate gap(oil) and exchange rate gap (non oil)
From the graph above, it can be seen that the value of exrgapno (exrgno) (i.e. net export of goods) were
negatives (deficits) for most of the years under consideration while the opposite were obtainable in the case of
exchange rate gap oil (i.e. exrgo), this means that the real sector of the economy is not virile enough to produce
tradable to meet the highly competitive world market, however, the shortcomings of the industrial sector is been
overcame by the surpluses recorded by the exrgo (net export of oil) over the years under review. This also
indicates that the most active sector in term of exportation is the oil sector of the Nigerian economy, therefore
Government needs to enhance productivity of tradable and encourage agricultural sector for maximum
production and suitable packaging standard in order to have overall positive impact on export of goods (non-oil)
in Nigeria.
Fig.3: The graph showing the 2-Gaps and the FDI.
This graph shows the trend among the Exrgapb (i.e. BOP), Savgap (savings gap) and foreign direct investment
(FDI). The trend shows the impact of FDI on the established gaps in the Nation which is positive. It further
disclosed that foreign direct investment moved in the direction of the gaps created by the macroeconomics
variables shocks.
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TABLE 1: STATIC ORDINARY LEAST SQUARED RESULT
Dependent Variable: GDP
Method: Least Squares
Date: 05/26/11 Time: 21:19
Sample (adjusted): 1981 2008
Included observations: 28 after adjustments
Variable Coefficients Std. Error t-Statistic Prob.
C -5437.08 196277.2 -0.435288 0.6680
FDI 3.786058 4.014928 0.942995 0.3569
SAVGAP -1.003352 0.420552 -2.385798 0.0270
EXRGAPT 2.168569 0.411783 5.266296 0.0000
EXRGAPB 0.274517 0.641906 0.427659 0.6735
EXRGAPO -0.090736 0.088192 -1.028850 0.3158
EXRGAPNO -3.727279 0.574085 -6.492558 0.0000
EXR 1854.352 5080.086 0.365024 0.7189
R-squared 0.991441 Mean dependent var 4719000.
Adjusted R-squared 0.988445 S.D. dependent var 7126969.
S.E. of regression 766105.7 Akaike info criterion 30.17098
Sum squared resid 1.17E+13 Schwarz criterion 30.55161
Log likelihood -414.3938 F-statistic 330.9519
Durbin-Watson stat 2.661332 Prob(F-statistic) 0.000000
The model can be written from the above result table as follows:
GDP = 855437.08 + 3.79FDI – 1.00 SAVGAP + 2.17 EXRGAPT + 0.27 EXRGAPB – 0.09 EXRGPO – 3.72
EXRGRAPNO + 18854.35 EXR.
The robustness of the static regression models is evidence by its R – squared, Adjusted R – Squared and F-
statistics values which measure the overall fitness of the model. The R2
which is a measure of goodness of fit
reveals that at most 99% of variation in GDP in caused by all included explanatory variable and at least 98%
variation is explained by the explanatory variables as evidence by the adjusted R- squared ( R2
), the D – Watson
statistics show some presence of serial autocorrelation which could make our result to be spurious (a violation of
OLS assumption).
On this basis a co-integration test would be observed. Looking at influence of each regressor on regressand.
Direct foreign Investment has positive sign as expected, and for 1% rise in GDP, FDI must have risen by
3.78%, although this is not significant in the short –run, also EXRGAPB is positively related to the GDP, this is
not expected because the gap should be a deficiency to the growth of the economy. However, this could be due
to the overriding exportation of oil covering the deficiency in the real sector of the Economy, this is equally not
statistically significant. The EXRGAPT and EXRGAPNO are both significantly influenced GDP but oppositely,
while EXRGAPT influenced GDP positively and significantly, though not expected, for same reason as
EXRGAPB, the latter influence the explained variable negative as expected and significantly. The SAVGAP
interestingly revealed that domestic savings is insufficient for required domestic investment such that a 1%
increase in the gap will reduce GDP by same margin and vice versa. The EXR is expected to rise nominally with
GDP which follow thus, but not significant.
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Table 2: The Stationarity Test
Augmented Dickey Fuller Unit Root Test
VARIABLES ADF @ LEVEL ADF @ FIRST
DIFFERENCE
ADF @ SECOND
DIFFERENCE
ORDER OF
INTEGRATION
EXPT 3.207612 2.129155 -7.091439 ⃰ I (2)
EXR -0.428249 -3.711457⃰⃰⃰ ⃰ ------------ I (1)
EXRGAPB 1.650261 -2.536794 -2.644312 ⃰ ⃰ ⃰ I (2)
EXRGAPNO 5.020418 2.828550 -8.261706 ⃰ I(2)
EXRGAPO -2.773244 ⃰⃰ ⃰ ⃰ ------------ ------------- I(0)
EXRGAPT -0.591930 -4.264363 ⃰ ------------- I(1)
FDI -1.285501 -5.227722 ⃰ ------------- I(1)
GDP -1.580168 -1.703232 -4.720948 ⃰ I(2)
IMP 0.355096 -4.531600 ⃰ ------------- I(1)
SAVGAP -0.438470 -5.853529 ⃰⃰ ⃰ ------------- I(1)
SOURCE: Author’s computation via E-view 5.0
*,** and *** represent 1%, 5% and 10% level of significance while MacKinnon critical values at same level
respectively are as follows; -3.769597, -3.004861 and -2.642242
The Augment Dickey Fuller (ADF) unit root test was conducted on all the included variables. In order to test for
stationary of all variables, the ADF calculated values are compared with MacKinnon 1%, 5% and 10% critical
values. Therefore, a variable is stationary, when the absolute value of its ADF calculated is greater than its
MacKinnon critical value. In other words if the ADF calculated value is less than the MacKinnon critical, value
at levels.
However, the table 2 above revealed that, only EXGAPO is statuary at level, while EXPT, EXRGAPB,
EXRGAPNO and GDP are stationary at second difference (2nd
diff) and EXRGAPT, SAVGAP, IMP, FDI, are
all stationary at first difference (1st
diff). The absence of unit root imply stationarity of the included variables
which is the border pass to test for long term(run) relationship among the included time series data. This is
mathematically represented below; for time series variable (e.g. GDP) ∆gdpt =a0 + a1t +a2∆gdpk
t=1 +∑b∆gdpt-1
+error
Table 3: Johansen Co-Integration Test
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ANALYSIS OF CO-INTEGRATION TESTS
run dynamics with long run equilibrium. These tests seem to be highly relevant to show inherent limitations of
traditional models. A time series is integrated of the same order to which it is differenced to make it stationary
(Gujarati 2003). In the word of komolafe (1996), two or more different series may not themselves be stationary,
but some linear combination of them may indeed be stationary with the generalization to more than two series.
The co-integration test is used to find out the long-run effect of all included variables. Here, we have tested for
long run relationship between GDP and all explanatory variables and this gave brilliant results of eight (8) co-
integrating Equation which implies that there exist a long run relationship among the entire included variable i.e.
GDP (Dependents variable) and EXRGRPT, EXRGAPB, EXRGAPO EXRGAPNO, EXR, FDI, SAVGAP etc.
(independent variables). This deputes long run relationship between the dependent and independent variables.
We therefore conclude that the variables explained one another in the long-run . Hence our regression is not
spurious. However, to adjust from short run drifts to long run equilibrium adjustment an error correction
mechanism would be estimated.
The test for correlation test was carried out to show whether GDP depends on FDI, EXRGAPB, EXRGAPT,
EXRGAPO, EXRGAPNO as well as determine the direction of causation The table above shows
interdependence of all included variables, as such we infer from it as follows;
For every increase in GDP, FDI accounts for 85% of the increase
For every increase in GDP, EXRGAPB accounts for about 86% of the increase
For every increase in GDP, EXRGAPO accounts for about 56%
For every decrease in GDP, EXRGAPNO accounts for 96% of the decrease
For every increase in GDP, EXRGAPT accounts for 95% of the decrease. Also export, import accounts for more
than 96% and 94% increase in GDP respectively or whether a feedback exist.
TABLE 5 PAIRWISE GRANGER CAUSALITY TESTS.
SEE APPENDIX FOR THE TABLE.
From the result table if the P value is less than 0.05 reject Ho. Therefore we arrived at the following:
There exist a bi-directional causation between FDI and economic growth in Nigeria. There exists bi-directional
causation between GDP and EXPT as well as IMP. Also exist unidirectional causation between FDI and EXPT,
on the other hands there exist bi-directional causation between FDI and import, this is an interesting result
because it shows that FDI in the short run in Nigeria promote importation but instead export promote FDI.
Therefore we can conclude that FDI in Nigeria promote export rather than import substitution because it equally
stimulates importation in Nigeria. Looking at other variables of importance to this model, EXRGAPB granger
causes GDP, while there exist a feedback. Also EXRGAPNO (Non-Oil Exchange Rate Gap) does not granger
causes GDP but GDP responded positively. This is to say that the volume of tradable of Nigeria is not
substantive enough to influence Nigeria output despite the fact that domestic output(Income) strive hard to
contribute to volume of export.On the other hand there exist bi-direction causation between EXRGAPO and the
GDP (this explains over-dependence of Nigeria on oil as a main source of foreign reserves and revenue)
Table6 THE DYNAMIC MODEL
PARSIMONIOUS ERROR CORRECTION
Dependent Variable: D(GDP)
Method: Least Squares
Date: 05/27/11 Time: 12:51
Sample (adjusted): 1985 2008
Included observations: 24 after adjustments
Variable Coefficient Std. Error t-Statistic Prob.
D(GDP,2) 0.994021 0.096093 10.34435 0.0000
D(GDP(-1),2) 0.766580 0.216892 3.534393 0.0123
D(FDI) 6.215934 2.176965 2.855321 0.0290
D(FDI(-1)) 23.77204 2.873354 8.273270 0.0002
D(FDI(-1),2) -18.01395 2.380672 -7.566749 0.0003
D(EXR,2) -7982.242 1470.728 -5.427409 0.0016
D(EXR) 16917.68 1784.414 9.480801 0.0001
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D(EXRGAPNO,2) 0.897625 0.250627 3.581511 0.0116
D(EXRGAPNO(-1),2) 0.577011 0.234495 2.460651 0.0491
D(EXRGAPO) -0.035001 0.034590 -1.011874 0.3507
D(EXRGAPO(-1)) -0.359771 0.082210 -4.376250 0.0047
D(EXRGAPO(-1),2) 0.256106 0.074176 3.452683 0.0136
D(EXRGAPT) -0.402629 0.154967 -2.598156 0.0408
D(EXRGAPT(-1)) -0.208298 0.335430 -0.620989 0.5574
D(EXRGAPT(-1),2) -0.013988 0.192906 -0.072510 0.0446
D(EXRGAPB) -0.519157 0.623060 -0.833237 0.0366
D(EXRGAPB(-1),2) -0.020218 0.248335 -0.081413 0.9378
ECM(-1) -0.060464 0.094023 0.643075 0.0440
R-squared 0.999431 Mean dependent var 990820.7
Adjusted R-squared 0.997817 S.D. dependent var 1605820.
S.E. of regression 75028.93 Akaike info criterion 25.40284
Sum squared resid 3.38E+10 Schwarz criterion 26.28638
Log likelihood -286.8341 Durbin-Watson stat 1.862766
Model Re-specification
D (GOP) = ϐ0 + β1D(GDP,2) + β2D(GDP(-1),2) + β3D(FDI) + β4D(FDI(-1)) + β5D(FDI(-1),2) + β6D(EXR,2) +
β7D(EXR) + β8D(EXRGAPNO,2) + β9D(EXRGAPNO(-1),2) + β10D(EXRGAPO) + β11D(EXRGAPO(-1),2) +
β12D(EXRGAPT) + β13 D (EXRGAPT(-1)) + β14D(EXRGAPT(-1),2) + β15 D (EXRGAPB) +
β16D(EXRGAPB(-1),2) + δ ECMt-1 + Ut
A- Priori Expectation
β1, β2, β3 , β4 , β5 , β6 β7 > 0 ; β8 ,β9 ,β10 , β11, β13, β14, β15, β16 < 0 ; δ<0 Where β1 ...................... β16
are parameters, and δ is called speed of adjustment must be negative to indicate disequilibrium.
D (GDP) = 0.994D(GDP,2) + 0.767D(GDP(-1),2) + 6.216D(FDI) + 23.772D(FDI(-1)) - 18.014D(FDI(-1),2)-
7982.242D(EXR,2)+16917.68D(EXR)+0.898D(EXRGAPNO,2)+0.577D(EXRGAPNO(-1),2)-
0.035D(EXRGAPO)-.360D(EXRGAPO(-1),2) – 0.402D(EXRGAPT) - 0.208 D (EXRGAPT(-1)) –
0.014D(EXRGAPT(-1),2) – 0.519 D (EXRGAPB) – 0.020D(EXRGAPB(-1),2) – 0.060ECMt-1 + Ut
The error correction variable (ECM) which is significant at 5% with negative sign which indicates that GDP is
below equilibrium and there is need to increase it in the short run. It should be noted also that the significant of
the ECV (error correction variable i.e. ECM) is an indication that there exist short run disequilibrium among the
variables. The mechanism for adjustment from short run drift to long run equilibrium is represented by the co-
efficient of the ECM(-1) which is known as speed of adjustment from which we can conclude that only 1% of
the disequilibrium can be correctly annually which imply that it will take a hundred year to adjust to long run
equilibrium.
All the included explanatory variables are at one level or the other significant except LAG EXRGAPT and LAG
EXRGAGB which are not considered to be variable of interest in the model. It is equally cleared here that GDP
and FDI are two indispensable variables both in short run and the long run all the exchange rate gaps have
negative sign as expected and are statistically significant. The R2
shows 99% reliability as well as the adjusted
R2
.
Robustness of the model is further supported by the value of our log like hood.
IV. CONCLUSION AND RECCOMENDATION
From the foregoing, we have been able to establish that gaps do exist in Nigerian economy as proposed
by Holis Chenery that LDCs suffers from the 2-gaps. We equally found out that gaps affects the economic
performance in Nigeria both in the short and long run but savings gap eroded in the long run, and that foreign
direct investment has done a great deal in bridging the gaps, though not sufficient enough, this agree with
Adeolu B.A(2008), Globerman(1979), blomstron (1986), Inibriani and Reganeti(1997). We equally investigated
the effect of FDI on both import and export and found that it promote the duo. Which in imply that FDI in
Nigeria is of export promotion and not import substitution.
We, however recommended as follows;
[1] That Government should intensify effort to attract more foreign investment by providing enabling
environment ( laws and ethics, and infrastructural development in addition to socio political stability)
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[2] That FDI should not be grossly relied upon for it has its own cost, such as capital flight, increase in
importation, which could further dis-equilibrate the Nigerian balance of payment, etc. This is because
FDI in Nigeria stimulate both export and imports both in the short and long run, a considerable mild FDI
is needed in the long run in order not to widen the existing exchange rate gap.
[3] That Government should create more jobs which would simultaneously increase domestic output,
income, savings and consumption and through multiplier effect generates further jobs
REFERENCES;
[1] Jhingal, M.L (2005) ; The economics of development and planning, Vrinda publications(p) ltd, 38th
edition.
[2] Upender, U.(2004) ; Applied econometrics, , Vrinda publications(p) ltd, 2nd
revised edition.
[3] Dimitrios, A. and STEPHEN G.A (2003); Applied econometrics, a modern approach using EViews and Microfit, Palgrave
Macmillan. revised edition.
[4] Engle, R.F. and Granger, C.W.J. (1987) “Cointegration and Error Correction: Representation, Estimation and Testing”,
Econometrical, 55: 251-276
[5] Blomstrom, M., D. Konan and R.E. Lipsey. 2000. FDI in the Restructuring of the Japanese economy. The European Institute of
Japanese Studies (EIJS), Working Paper No 91. Stockholm
[6] Blomstrom, M. and F. Sjoholm. 1999. “Technological transfer and spillover: Does local participation with multinationals matter?”
European Economic Review, 43: 915–23.
[7] International journal of business volume 6 pages 348-368
APPENDIX
Pairwise Granger Causality Tests
Date: 05/27/11 Time: 12:19
Sample: 1980 2008
Lags: 2
Null Hypothesis: Obs F-Statistic Probability
IMP does not Granger Cause EXPT 27 0.55172 0.58372
EXPT does not Granger Cause IMP 14.6510 9.0E-05
GDP does not Granger Cause EXPT 27 6.78140 0.00508
EXPT does not Granger Cause GDP 4.24441 0.02761
FDI does not Granger Cause EXPT 27 1.29317 0.29445
EXPT does not Granger Cause FDI 8.44628 0.00190
EXRGAPB does not Granger Cause EXPT 27 0.48867 0.61994
EXPT does not Granger Cause EXRGAPB 5.43159 0.01210
EXRGAPNO does not Granger Cause EXPT 27 3.66062 0.04243
EXPT does not Granger Cause EXRGAPNO 3.33110 0.05448
EXRGAPO does not Granger Cause EXPT 27 5.68484 0.01023
EXPT does not Granger Cause EXRGAPO 8.56515 0.00177
EXR does not Granger Cause EXPT 27 9.71130 0.00095
EXPT does not Granger Cause EXR 0.51106 0.60681
EXRGAPT does not Granger Cause EXPT 27 2.83512 0.08026
EXPT does not Granger Cause EXRGAPT 17.0113 3.4E-05
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GDP does not Granger Cause IMP 27 7.30983 0.00368
IMP does not Granger Cause GDP 6.10804 0.00776
FDI does not Granger Cause IMP 27 10.5077 0.00063
IMP does not Granger Cause FDI 5.20427 0.01411
EXRGAPB does not Granger Cause IMP 27 14.8135 8.4E-05
IMP does not Granger Cause EXRGAPB 5.37739 0.01255
EXRGAPNO does not Granger Cause IMP 27 5.12609 0.01488
IMP does not Granger Cause EXRGAPNO 2.91707 0.07521
EXRGAPO does not Granger Cause IMP 27 7.20107 0.00393
IMP does not Granger Cause EXRGAPO 4.68495 0.02018
EXR does not Granger Cause IMP 27 9.48334 0.00107
IMP does not Granger Cause EXR 0.45234 0.64192
EXRGAPT does not Granger Cause IMP 27 7.96411 0.00250
IMP does not Granger Cause EXRGAPT 20.5224 9.3E-06
SAVGAP does not Granger Cause IMP 5 NA NA
IMP does not Granger Cause SAVGAP NA NA
FDI does not Granger Cause GDP 27 5.64332 0.01051
GDP does not Granger Cause FDI 33.0041 2.4E-07
EXRGAPB does not Granger Cause GDP 27 5.15896 0.01455
GDP does not Granger Cause EXRGAPB 10.6214 0.00059
EXRGAPNO does not Granger Cause GDP 27 1.99027 0.16052
GDP does not Granger Cause EXRGAPNO 8.12234 0.00228
EXRGAPO does not Granger Cause GDP 27 8.86556 0.00150
GDP does not Granger Cause EXRGAPO 14.4864 9.7E-05
EXR does not Granger Cause GDP 27 5.08142 0.01534
GDP does not Granger Cause EXR 0.02542 0.97493
EXRGAPT does not Granger Cause GDP 27 3.86040 0.03656
GDP does not Granger Cause EXRGAPT 6.86958 0.00481
SAVGAP does not Granger Cause GDP 5 NA NA
GDP does not Granger Cause SAVGAP NA NA
EXRGAPB does not Granger Cause FDI 27 12.3940 0.00025
FDI does not Granger Cause EXRGAPB 10.1802 0.00074
EXRGAPNO does not Granger Cause FDI 27 7.13105 0.00410
FDI does not Granger Cause EXRGAPNO 25.7908 1.7E-06
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EXRGAPO does not Granger Cause FDI 27 55.5645 2.5E-09
FDI does not Granger Cause EXRGAPO 97.1672 1.2E-11
EXR does not Granger Cause FDI 27 4.99817 0.01624
FDI does not Granger Cause EXR 0.16245 0.85106
EXRGAPT does not Granger Cause FDI 27 65.7634 5.2E-10
FDI does not Granger Cause EXRGAPT 3.04980 0.06776
SAVGAP does not Granger Cause FDI 5 NA NA
FDI does not Granger Cause SAVGAP NA NA
EXRGAPNO does not Granger Cause EXRGAPB 27 3.73900 0.04001
EXRGAPB does not Granger Cause EXRGAPNO 15.6807 5.9E-05
EXRGAPO does not Granger Cause EXRGAPB 27 125.105 9.6E-13
EXRGAPB does not Granger Cause EXRGAPO 58.4255 1.6E-09
EXR does not Granger Cause EXRGAPB 27 7.56787 0.00315
EXRGAPB does not Granger Cause EXR 0.38006 0.68822
EXRGAPT does not Granger Cause EXRGAPB 27 25.2046 2.0E-06
EXRGAPB does not Granger Cause EXRGAPT 3.67431 0.04199
SAVGAP does not Granger Cause EXRGAPB 5 NA NA
EXRGAPB does not Granger Cause SAVGAP NA NA
EXRGAPO does not Granger Cause EXRGAPNO 27 25.6626 1.8E-06
EXRGAPNO does not Granger Cause EXRGAPO 4.91126 0.01724
EXR does not Granger Cause EXRGAPNO 27 3.94916 0.03424
EXRGAPNO does not Granger Cause EXR 0.50425 0.61077
EXRGAPT does not Granger Cause EXRGAPNO 27 6.89071 0.00475
EXRGAPNO does not Granger Cause EXRGAPT 8.14052 0.00226
SAVGAP does not Granger Cause EXRGAPNO 5 NA NA
EXRGAPNO does not Granger Cause SAVGAP NA NA
EXR does not Granger Cause EXRGAPO 27 3.56608 0.04556
EXRGAPO does not Granger Cause EXR 0.17815 0.83801
EXRGAPT does not Granger Cause EXRGAPO 27 52.9974 3.9E-09
EXRGAPO does not Granger Cause EXRGAPT 0.85306 0.43973
SAVGAP does not Granger Cause EXRGAPO 5 NA NA
EXRGAPO does not Granger Cause SAVGAP NA NA
EXRGAPT does not Granger Cause EXR 27 0.39258 0.67995
EXR does not Granger Cause EXRGAPT 8.72752 0.00162
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SAVGAP does not Granger Cause EXR 5 NA NA
EXR does not Granger Cause SAVGAP NA NA
SAVGAP does not Granger Cause EXRGAPT 5 NA NA
EXRGAPT does not Granger Cause SAVGAP NA NA