This document summarizes a study that examines the impact of socio-political instability during national election periods in Ghana on foreign direct investment (FDI) inflows. The study uses an autoregressive distributed lag bounds cointegration approach to analyze quarterly data from 1992 to 2010, during which Ghana had five national elections. The results indicate that socio-political instability exerts a negative influence on FDI inflows in both the short- and long-run. The paper concludes that Ghana needs to limit tensions during election periods in order to maintain competitiveness as an FDI destination in West Africa and globally.
The document discusses foreign direct investment (FDI) from several perspectives. It defines FDI and explains who is concerned about it, including governments, competitors, suppliers/customers, and managers/workers. It outlines reasons for FDI from both a supply side perspective, like lower costs and access to resources/skills, and demand side, like accessing new markets. It also discusses patterns of FDI by country and trends over time. Major investing countries in the US and where the US invests are outlined. Statistics on FDI in the Philippines from 2007-2010 are provided, including top investing countries and companies. The international product cycle and Dunning's eclectic view, which categorizes advantages for FDI, are briefly explained
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.
Effects of Political Factors on Foreign Direct Investment flowsmitikayalew
This document discusses the effects of political factors on foreign direct investment (FDI) flows based on a review of existing literature. It finds that while economic factors are important determinants of FDI decisions, political environment and institutional quality also significantly impact FDI flows. Specifically, countries with greater political stability, transparent legal systems, and market-supporting policies tend to attract more FDI. However, the literature lacks consensus on how to define and measure political risk and institutions. The review also notes gaps in distinguishing between firm-level and country-level perspectives on FDI determinants.
This document discusses foreign direct investment (FDI) in India. It begins by defining FDI and its importance for India's economic development. The objectives of the document are then outlined, including analyzing India's current FDI scenario, investigating views on FDI, and evaluating challenges. Several benefits of FDI for India are noted, such as increased employment, technology transfer, and infrastructure development. A SWOT analysis of FDI in India is also presented, identifying strengths like a growing economy, as well as weaknesses like a lack of trained workers. Major FDI investing countries and sectors in India are listed, and challenges of FDI are discussed.
Foreign direct investment (FDI) involves a company from one country making a physical investment into building or acquiring assets in another country, such as by establishing a factory or purchasing a company. The document discusses various types of FDI, incentives for attracting FDI, and its importance and impact. It also provides examples of FDI statistics and trends in countries such as China, Africa, and European nations. While FDI can spur economic growth, increase skills and technology transfers, it also introduces risks such as political instability and crowding out of local firms.
The global pattern of foreign direct investment in recent yearsAlexander Decker
This document summarizes research on patterns of foreign direct investment (FDI) globally and factors influencing it. It discusses how FDI has shifted from developed to developing countries, especially Brazil, Russia, India, China and South Africa (BRICS). It also examines theories around why multinational corporations engage in FDI according to advantages of resources, markets, and costs. Political stability, property rights, tax policy and regulations in host countries impact FDI flows. Capital flight is another factor, as the US benefits from outflows to other nations due to the strength of the dollar.
Foreign Direct Investment
http://www.profitableinvestingtips.com/investing-tips/foreign-direct-investment
Follow the money is age old advice for knowing why something is happening. In this case we would like to follow the money that goes into foreign direct investment. Foreign direct investment is done by folks with lots of money and the intention to stay a course and make a profit. If you are looking for offshore investment ideas, take a look at where foreign direct investment goes year after year after year. There have been changes afoot regarding where foreign direct investment is going. A very useful reference in this regard is the just published United Nations study, World Investment Report 2013. We have used 2007 and 2012 as bookend comparison years as 2007 was just before the onset of the worst recession in three quarters of a century and 2012 is the most recent year reported. Of note is that direct foreign investment has fallen in the large majority of nations but there are exceptions that should help guide investors with their fundamental analysis of where to put their money in the years ahead. First take a look at the data and then read about foreign direct investment.
Foreign Direct Investment Comparison of 2007 and 2012
In Billions of USD
Taken from the United Nations World Investment Report 2013
European Union 859 323
UK 200 71
France 96 37
Germany 80 67
Canada 117 54
USA 216 329
Mexico 31 26
Japan 23 123
China 84 84
China, Hong Kong 62 83
South Korea 9 33
India 25 9
South Africa 6 4
Russian Federation 57 51
Brazil 35 -3
The largest gain in foreign direct investment on our chart is in the USA followed closely by Japan (113 billion to 100 billion. As a percentage increase Japan out performs everyone with an increase of more than 400%. Other significant performers are South Korea with a more than 200% increase in foreign direct investment and Hong Kong with a twenty-five percent increase. It is significant that the BRICS nations which were thought to be ready to move up economically lost as a group. China stayed put at $84 Billion. Russia fell from $57 Billion to $52 Billion and South Africa fell from $6 Billion to $4 Billion. Brazil fell off the charts going from $35 Billion in direct foreign investment to a negative $3 Billion because investors are taking money out of the country!
Direct Foreign Investment: What Is It and Why Do It?
In general, foreign direct investment includes mergers and acquisitions, the building of new facilities, reinvestment of profits earned overseas and cross border loans within offshore operations. Basically companies invest offshore because they expect to make a profit over the long term. Because of the long timeline needed to research new projects and develop them, this sort of investment is typically well thought out. Reasons to invest offshore aside from expected profits
The document discusses foreign direct investment (FDI) from several perspectives. It defines FDI and explains who is concerned about it, including governments, competitors, suppliers/customers, and managers/workers. It outlines reasons for FDI from both a supply side perspective, like lower costs and access to resources/skills, and demand side, like accessing new markets. It also discusses patterns of FDI by country and trends over time. Major investing countries in the US and where the US invests are outlined. Statistics on FDI in the Philippines from 2007-2010 are provided, including top investing countries and companies. The international product cycle and Dunning's eclectic view, which categorizes advantages for FDI, are briefly explained
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.
Effects of Political Factors on Foreign Direct Investment flowsmitikayalew
This document discusses the effects of political factors on foreign direct investment (FDI) flows based on a review of existing literature. It finds that while economic factors are important determinants of FDI decisions, political environment and institutional quality also significantly impact FDI flows. Specifically, countries with greater political stability, transparent legal systems, and market-supporting policies tend to attract more FDI. However, the literature lacks consensus on how to define and measure political risk and institutions. The review also notes gaps in distinguishing between firm-level and country-level perspectives on FDI determinants.
This document discusses foreign direct investment (FDI) in India. It begins by defining FDI and its importance for India's economic development. The objectives of the document are then outlined, including analyzing India's current FDI scenario, investigating views on FDI, and evaluating challenges. Several benefits of FDI for India are noted, such as increased employment, technology transfer, and infrastructure development. A SWOT analysis of FDI in India is also presented, identifying strengths like a growing economy, as well as weaknesses like a lack of trained workers. Major FDI investing countries and sectors in India are listed, and challenges of FDI are discussed.
Foreign direct investment (FDI) involves a company from one country making a physical investment into building or acquiring assets in another country, such as by establishing a factory or purchasing a company. The document discusses various types of FDI, incentives for attracting FDI, and its importance and impact. It also provides examples of FDI statistics and trends in countries such as China, Africa, and European nations. While FDI can spur economic growth, increase skills and technology transfers, it also introduces risks such as political instability and crowding out of local firms.
The global pattern of foreign direct investment in recent yearsAlexander Decker
This document summarizes research on patterns of foreign direct investment (FDI) globally and factors influencing it. It discusses how FDI has shifted from developed to developing countries, especially Brazil, Russia, India, China and South Africa (BRICS). It also examines theories around why multinational corporations engage in FDI according to advantages of resources, markets, and costs. Political stability, property rights, tax policy and regulations in host countries impact FDI flows. Capital flight is another factor, as the US benefits from outflows to other nations due to the strength of the dollar.
Foreign Direct Investment
http://www.profitableinvestingtips.com/investing-tips/foreign-direct-investment
Follow the money is age old advice for knowing why something is happening. In this case we would like to follow the money that goes into foreign direct investment. Foreign direct investment is done by folks with lots of money and the intention to stay a course and make a profit. If you are looking for offshore investment ideas, take a look at where foreign direct investment goes year after year after year. There have been changes afoot regarding where foreign direct investment is going. A very useful reference in this regard is the just published United Nations study, World Investment Report 2013. We have used 2007 and 2012 as bookend comparison years as 2007 was just before the onset of the worst recession in three quarters of a century and 2012 is the most recent year reported. Of note is that direct foreign investment has fallen in the large majority of nations but there are exceptions that should help guide investors with their fundamental analysis of where to put their money in the years ahead. First take a look at the data and then read about foreign direct investment.
Foreign Direct Investment Comparison of 2007 and 2012
In Billions of USD
Taken from the United Nations World Investment Report 2013
European Union 859 323
UK 200 71
France 96 37
Germany 80 67
Canada 117 54
USA 216 329
Mexico 31 26
Japan 23 123
China 84 84
China, Hong Kong 62 83
South Korea 9 33
India 25 9
South Africa 6 4
Russian Federation 57 51
Brazil 35 -3
The largest gain in foreign direct investment on our chart is in the USA followed closely by Japan (113 billion to 100 billion. As a percentage increase Japan out performs everyone with an increase of more than 400%. Other significant performers are South Korea with a more than 200% increase in foreign direct investment and Hong Kong with a twenty-five percent increase. It is significant that the BRICS nations which were thought to be ready to move up economically lost as a group. China stayed put at $84 Billion. Russia fell from $57 Billion to $52 Billion and South Africa fell from $6 Billion to $4 Billion. Brazil fell off the charts going from $35 Billion in direct foreign investment to a negative $3 Billion because investors are taking money out of the country!
Direct Foreign Investment: What Is It and Why Do It?
In general, foreign direct investment includes mergers and acquisitions, the building of new facilities, reinvestment of profits earned overseas and cross border loans within offshore operations. Basically companies invest offshore because they expect to make a profit over the long term. Because of the long timeline needed to research new projects and develop them, this sort of investment is typically well thought out. Reasons to invest offshore aside from expected profits
The idea of an “investment development path” (IDP) was introduced by John H. Dunning (1981a) as a dynamic approach within the paradigm of ownership, locational and internalization advantages (OLI).The IDP hypothesizes an association between a country’s level of development (proxied by GDP per capita) and its international investment position (net foreign direct investment (FDI) stock, i.e. outward minus inward direct investment stocks).
As the country develops, the conditions for domestic and foreign companies change, affecting the flows of inward and outward FDI.However, inward and outward FDI affect the economic structure as well – there is a dynamic interaction between the two.
Governments can influence a country’s conditions by creating public goods on which competitiveness can be based (Buckley and Casson, 1998).
India’s economic development and the inward and outward FDI, initially do show a pattern which is similar to first two stages of the IDP theory. As expected in the initial stage, FDI inflows are much higher as compared to outflows, showing decreasing NOIpc. However, suddenly in 1998, the outward investment started increasing. This trend continued until the year 2000, thereafter it took a reverse direction. In the year 2006 there were some large takeovers by Indian firms. The Assocham study expects the FDI outflows to be higher than the FDI inflows in the year 2007-08. This is something that is expected to happen in the fourth or fifth stage of IDP. This is where India’s development path slightly differs from the IDP that was shown in Dunning, and Dunning and Narula’s studies. Apparently, the main reason for this diversion is that, India’s FDI outflows are more firm-specific, and most of the outflow in 2006 was caused by Tata Steel and Hindalco. Rather than the FDI inflows, it is the competitive atmosphere and removal of barriers like licence etc, that has contributed more to India’s increase in GDP. The FDI inflows for India are very small and did not grow as fast as it did for China, owing to some macro level factors like infrastructure, speed of regulation change, power-shortage in many parts of the country, red tape etc. This has mainly lead to the situation where the FDI outflows are more firm-specific, rather than representing a trend for the whole nation, and most probably, that is the reason why India’s FDI outflows are sporadically too high in certain years, than would have expected in the IDP framework.
FOREIGN DIRECT INVESTMENT- INTERNATIONAL BUSINESSRazyyn EMing
The document discusses different theories and perspectives on foreign direct investment (FDI). It describes Knickerbocker's view that FDI flows result from strategic competition between firms. Vernon argued that firms undertake FDI at different stages of a product's lifecycle. Locations can provide advantages for FDI through externalities. Views on FDI include the radical view of it enabling imperialist exploitation, the free market view of distributing production according to comparative advantage, and pragmatic nationalism weighing costs and benefits. Recently the free market stance has increased global FDI and liberalized countries receiving more FDI.
Relation Between Inflow Of FDI and The Development Of India's EconomyIJTEMT
1) The document examines the relationship between foreign direct investment (FDI) inflows and economic development in India. It discusses how FDI has increased in India since economic reforms began in 1991, with sectors like services, telecommunications and software attracting significant investment.
2) The paper aims to analyze the impact of FDI on India's GDP as a measure of economic development. It also examines how economic reforms have affected FDI in India and constraints to increasing FDI.
3) The document provides context on the growth of FDI globally and its potential benefits, like increasing employment, productivity, and technology transfer. However, it notes that some studies have struggled to find a definitive causal link between FDI and economic
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.
Foreign direct investment (FDI) involves a company from one country making a physical investment in building or expanding a business in another country. There are several potential benefits of FDI for host countries, including transferring technology, exploiting natural resources, and generating employment. However, the effects of FDI depend on the type (e.g. greenfield vs mergers and acquisitions) and can include both positive and negative externalities. Political risk also affects foreign investment and refers to complications from political decisions and instability in a country that impact business objectives and outcomes.
Foreign Direct Investment (Theories of FDI)Mamta Bhola
This document discusses different theories of foreign direct investment (FDI). It begins by covering Stephen Hymer's theory of imperfect markets, which views multinational corporations as oligopolistic firms that seek to establish control and maximize profits by taking advantage of market imperfections in host countries. It then briefly mentions the product life cycle theory. The majority of the document is spent explaining the internalization approach theory and eclectic theory of FDI, which incorporate factors of ownership advantages, locational advantages, and internalization to explain why firms undertake FDI. It concludes by listing some common objectives of companies engaging in FDI, such as reducing costs, gaining economies of scale, and knowledge sharing.
The document discusses foreign direct investment (FDI), including its definition, types, factors that encourage it, modes, direction, and India as an investment destination. It provides an overview of FDI and outlines the approval process and sector-wise policies in India. Key advantages include infrastructure development and technology transfer, while costs can include impacts on domestic producers and natural resources. Political ideology also influences views on FDI.
Foreign direct investment to bangladeshZahidul Islam
This document discusses Bangladesh's growing economy and investment opportunities. It notes that Bangladesh has been recognized by Goldman Sachs and the IMF as an emerging economy with strong growth potential. The government is working to promote private investment by offering competitive tax incentives and an improved investment climate. Statistics are provided on GDP, exports, imports, foreign reserves and other economic indicators that demonstrate Bangladesh's economic growth and resilience.
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.
This document discusses foreign direct investment (FDI) in India. It defines FDI and other related terms like foreign institutional investors, depository receipts, and foreign currency convertible bonds. It outlines different forms of FDI like joint ventures, acquisitions, and wholly owned subsidiaries. The document also discusses factors that influence FDI, reasons for companies to invest abroad, and costs and benefits of FDI to both home and host countries. It provides examples of sectors where FDI is prohibited in India and explains the process for an Indian company to receive FDI.
This document discusses foreign direct investment and why companies invest overseas. It provides several key reasons why companies establish foreign subsidiaries. Market seeking and resource seeking are two primary motivations, where companies seek new buyers for goods and services or find cheaper resources and labor abroad. Strategic asset seeking and efficiency seeking are also reasons, where firms invest overseas to build strategic assets or take advantage of distribution networks and technology. The document outlines both direct investment, involving physical investments in plants and equipment, and portfolio investment in foreign stocks and bonds.
Impact of fdi and joint venture on employment generationAlexander Decker
This document analyzes the impact of foreign direct investment (FDI) and joint ventures on employment generation in Bangladesh. It finds that FDI inflows into Bangladesh occurred randomly, while joint venture inflows followed a trend. Regression analysis showed that FDI inflows did not significantly explain changes in Bangladesh's employment levels over the past decade. However, joint ventures were found to have a statistically significant positive impact on employment generation in Bangladesh.
This document is a project report submitted by Mr. Jiten H Menghani, a student at the University of Mumbai, for his M.Com degree. The report is about international capital movements and was guided by Prof. Mrs. Rachana Joshi. It includes an abstract, introduction, types of international capital movements such as foreign direct investment and portfolio investment, and factors influencing capital flows. It also discusses the role, impacts and drawbacks of foreign capital as well as capital flows to developing countries and India.
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from foreign portfolio investment by a notion of direct control.
Catalysts and barriers to foreign direct investment in ghanaAlexander Decker
This document summarizes a study that investigated factors influencing foreign direct investment (FDI) in Ghana. The study found that abundant natural resources, political stability, cheap labor, and growing markets encourage FDI in Ghana. However, poor ICT infrastructure, volatile exchange rates, unreliable energy and water supplies, and a poor road network inhibit FDI inflows. The document provides background on theories of how FDI impacts economic growth and reviews literature on determinants and barriers of FDI.
Foreign Direct Investment in Developing Countriesadii
This document discusses a conceptual framework for evaluating investments in developing countries. It aims to develop a model that combines existing theories and considers unique qualitative factors that influence an investment's competitive advantage and success. These factors are categorized as political, financial or economic risks. The framework assigns weightings to different risk factors and ranks countries based on the likelihood of each factor occurring. It then calculates a risk premium to compare investment opportunities, using South Africa-based SABMiller's potential investments in Angola and Botswana as a case study.
This document defines foreign direct investment and outlines some of the main theories, forms, strategies, and costs/benefits associated with FDI. It defines FDI as long-term investments involving control or influence over management. The key theories discussed are the MacDougall-Kemp hypothesis of capital moving from abundant to scarce economies, and industrial organization and location-specific theories. The main forms are greenfield investment, mergers and acquisitions, and brownfield investment. Strategies include firm-specific advantages and lowering costs. Benefits are factors of production, economic growth, and balance of payments, while costs include cultural influence and resource overuse.
Revisiting the link between government spending and economic growth in the pr...iosrjce
This paper aims to revisit the link between government spending and economic growth in the present
of Wagner’s Law in Nigeria from 1972-2011. The examination is based on the functional form of Wagner Law
augmented by incorporating the square of GDP. We employed ARDL bound testing, combine cointegration and
Toda-Yamamoto non- Granger causality test in this study. Cointegration was found in both methods, and the
causality test supports the presence of Wagner’ Law. However, increase in GDP (i.e. Square of GDP) has an
adverse impact on economic growth. This shows that GDP as a proxy for economic growth has a certain point
from which, any additional increase will reduce government spending. Therefore, the government needs to come
up with programs that will motivate small and medium enterprises at all levels of government. Hence, the
increase in GDP in the long run, tend to reduce government expenditure, which in turn prevents deficit
financing
This summary provides an overview of the document:
1) The document investigates the impact of monetary policy rate, interbank rate, and savings deposit on inflation rate in Nigeria from 2006-2014 using an autoregressive distributed lag model.
2) The results of the long-run model show that monetary policy rate, interbank rate, and savings deposit were all negatively and significantly affecting inflation rate during the period studied.
3) In the short-run, monetary policy rate and interbank rates were found to negatively and significantly determine inflation fluctuations, while savings deposit had a positive but insignificant impact.
Demand for money in hungary an ardl approach by nikolaos dritsakisBalaji Bathmanaban
This study examines the demand for money in Hungary using quarterly data from 1995 to 2010 within an autoregressive distributed lag (ARDL) framework. The results of the bounds test confirm a stable, long-run relationship between M1 real monetary aggregate, real income, inflation rate, and nominal exchange rate. Specifically, real income has a positive impact on money demand while inflation and exchange rates have negative impacts. Stability tests also reveal a stable money demand function over the period examined, indicating M1 is a suitable intermediate target for monetary policy in Hungary.
The main focus of this study is to investigate the impact of expansion in economic growth on
government expenditure in Nigeria covering the periods 1970 to 2012. Gross Domestic Product (GDP) was
used as a proxy for economic growth, and the GDP time series was decomposed using the partial sum approach
in order to achieve asymmetry in the variable. The asymmetric ARDL estimation technique was appropriately
employed in this study. The findings of this study revealed that expansion in economic growth has significant
impact on government expenditure in Nigeria. The study further provided evidence of long-run causality from
boom/expansion in economic growth to government expenditure in Nigeria but could not support any evidence
of short-run causality. The researcher recommended among others, that Governments in Nigeria should give
more impetus to policies that will guarantee sustainable economic growth.
The idea of an “investment development path” (IDP) was introduced by John H. Dunning (1981a) as a dynamic approach within the paradigm of ownership, locational and internalization advantages (OLI).The IDP hypothesizes an association between a country’s level of development (proxied by GDP per capita) and its international investment position (net foreign direct investment (FDI) stock, i.e. outward minus inward direct investment stocks).
As the country develops, the conditions for domestic and foreign companies change, affecting the flows of inward and outward FDI.However, inward and outward FDI affect the economic structure as well – there is a dynamic interaction between the two.
Governments can influence a country’s conditions by creating public goods on which competitiveness can be based (Buckley and Casson, 1998).
India’s economic development and the inward and outward FDI, initially do show a pattern which is similar to first two stages of the IDP theory. As expected in the initial stage, FDI inflows are much higher as compared to outflows, showing decreasing NOIpc. However, suddenly in 1998, the outward investment started increasing. This trend continued until the year 2000, thereafter it took a reverse direction. In the year 2006 there were some large takeovers by Indian firms. The Assocham study expects the FDI outflows to be higher than the FDI inflows in the year 2007-08. This is something that is expected to happen in the fourth or fifth stage of IDP. This is where India’s development path slightly differs from the IDP that was shown in Dunning, and Dunning and Narula’s studies. Apparently, the main reason for this diversion is that, India’s FDI outflows are more firm-specific, and most of the outflow in 2006 was caused by Tata Steel and Hindalco. Rather than the FDI inflows, it is the competitive atmosphere and removal of barriers like licence etc, that has contributed more to India’s increase in GDP. The FDI inflows for India are very small and did not grow as fast as it did for China, owing to some macro level factors like infrastructure, speed of regulation change, power-shortage in many parts of the country, red tape etc. This has mainly lead to the situation where the FDI outflows are more firm-specific, rather than representing a trend for the whole nation, and most probably, that is the reason why India’s FDI outflows are sporadically too high in certain years, than would have expected in the IDP framework.
FOREIGN DIRECT INVESTMENT- INTERNATIONAL BUSINESSRazyyn EMing
The document discusses different theories and perspectives on foreign direct investment (FDI). It describes Knickerbocker's view that FDI flows result from strategic competition between firms. Vernon argued that firms undertake FDI at different stages of a product's lifecycle. Locations can provide advantages for FDI through externalities. Views on FDI include the radical view of it enabling imperialist exploitation, the free market view of distributing production according to comparative advantage, and pragmatic nationalism weighing costs and benefits. Recently the free market stance has increased global FDI and liberalized countries receiving more FDI.
Relation Between Inflow Of FDI and The Development Of India's EconomyIJTEMT
1) The document examines the relationship between foreign direct investment (FDI) inflows and economic development in India. It discusses how FDI has increased in India since economic reforms began in 1991, with sectors like services, telecommunications and software attracting significant investment.
2) The paper aims to analyze the impact of FDI on India's GDP as a measure of economic development. It also examines how economic reforms have affected FDI in India and constraints to increasing FDI.
3) The document provides context on the growth of FDI globally and its potential benefits, like increasing employment, productivity, and technology transfer. However, it notes that some studies have struggled to find a definitive causal link between FDI and economic
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.
Foreign direct investment (FDI) involves a company from one country making a physical investment in building or expanding a business in another country. There are several potential benefits of FDI for host countries, including transferring technology, exploiting natural resources, and generating employment. However, the effects of FDI depend on the type (e.g. greenfield vs mergers and acquisitions) and can include both positive and negative externalities. Political risk also affects foreign investment and refers to complications from political decisions and instability in a country that impact business objectives and outcomes.
Foreign Direct Investment (Theories of FDI)Mamta Bhola
This document discusses different theories of foreign direct investment (FDI). It begins by covering Stephen Hymer's theory of imperfect markets, which views multinational corporations as oligopolistic firms that seek to establish control and maximize profits by taking advantage of market imperfections in host countries. It then briefly mentions the product life cycle theory. The majority of the document is spent explaining the internalization approach theory and eclectic theory of FDI, which incorporate factors of ownership advantages, locational advantages, and internalization to explain why firms undertake FDI. It concludes by listing some common objectives of companies engaging in FDI, such as reducing costs, gaining economies of scale, and knowledge sharing.
The document discusses foreign direct investment (FDI), including its definition, types, factors that encourage it, modes, direction, and India as an investment destination. It provides an overview of FDI and outlines the approval process and sector-wise policies in India. Key advantages include infrastructure development and technology transfer, while costs can include impacts on domestic producers and natural resources. Political ideology also influences views on FDI.
Foreign direct investment to bangladeshZahidul Islam
This document discusses Bangladesh's growing economy and investment opportunities. It notes that Bangladesh has been recognized by Goldman Sachs and the IMF as an emerging economy with strong growth potential. The government is working to promote private investment by offering competitive tax incentives and an improved investment climate. Statistics are provided on GDP, exports, imports, foreign reserves and other economic indicators that demonstrate Bangladesh's economic growth and resilience.
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.
This document discusses foreign direct investment (FDI) in India. It defines FDI and other related terms like foreign institutional investors, depository receipts, and foreign currency convertible bonds. It outlines different forms of FDI like joint ventures, acquisitions, and wholly owned subsidiaries. The document also discusses factors that influence FDI, reasons for companies to invest abroad, and costs and benefits of FDI to both home and host countries. It provides examples of sectors where FDI is prohibited in India and explains the process for an Indian company to receive FDI.
This document discusses foreign direct investment and why companies invest overseas. It provides several key reasons why companies establish foreign subsidiaries. Market seeking and resource seeking are two primary motivations, where companies seek new buyers for goods and services or find cheaper resources and labor abroad. Strategic asset seeking and efficiency seeking are also reasons, where firms invest overseas to build strategic assets or take advantage of distribution networks and technology. The document outlines both direct investment, involving physical investments in plants and equipment, and portfolio investment in foreign stocks and bonds.
Impact of fdi and joint venture on employment generationAlexander Decker
This document analyzes the impact of foreign direct investment (FDI) and joint ventures on employment generation in Bangladesh. It finds that FDI inflows into Bangladesh occurred randomly, while joint venture inflows followed a trend. Regression analysis showed that FDI inflows did not significantly explain changes in Bangladesh's employment levels over the past decade. However, joint ventures were found to have a statistically significant positive impact on employment generation in Bangladesh.
This document is a project report submitted by Mr. Jiten H Menghani, a student at the University of Mumbai, for his M.Com degree. The report is about international capital movements and was guided by Prof. Mrs. Rachana Joshi. It includes an abstract, introduction, types of international capital movements such as foreign direct investment and portfolio investment, and factors influencing capital flows. It also discusses the role, impacts and drawbacks of foreign capital as well as capital flows to developing countries and India.
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from foreign portfolio investment by a notion of direct control.
Catalysts and barriers to foreign direct investment in ghanaAlexander Decker
This document summarizes a study that investigated factors influencing foreign direct investment (FDI) in Ghana. The study found that abundant natural resources, political stability, cheap labor, and growing markets encourage FDI in Ghana. However, poor ICT infrastructure, volatile exchange rates, unreliable energy and water supplies, and a poor road network inhibit FDI inflows. The document provides background on theories of how FDI impacts economic growth and reviews literature on determinants and barriers of FDI.
Foreign Direct Investment in Developing Countriesadii
This document discusses a conceptual framework for evaluating investments in developing countries. It aims to develop a model that combines existing theories and considers unique qualitative factors that influence an investment's competitive advantage and success. These factors are categorized as political, financial or economic risks. The framework assigns weightings to different risk factors and ranks countries based on the likelihood of each factor occurring. It then calculates a risk premium to compare investment opportunities, using South Africa-based SABMiller's potential investments in Angola and Botswana as a case study.
This document defines foreign direct investment and outlines some of the main theories, forms, strategies, and costs/benefits associated with FDI. It defines FDI as long-term investments involving control or influence over management. The key theories discussed are the MacDougall-Kemp hypothesis of capital moving from abundant to scarce economies, and industrial organization and location-specific theories. The main forms are greenfield investment, mergers and acquisitions, and brownfield investment. Strategies include firm-specific advantages and lowering costs. Benefits are factors of production, economic growth, and balance of payments, while costs include cultural influence and resource overuse.
Revisiting the link between government spending and economic growth in the pr...iosrjce
This paper aims to revisit the link between government spending and economic growth in the present
of Wagner’s Law in Nigeria from 1972-2011. The examination is based on the functional form of Wagner Law
augmented by incorporating the square of GDP. We employed ARDL bound testing, combine cointegration and
Toda-Yamamoto non- Granger causality test in this study. Cointegration was found in both methods, and the
causality test supports the presence of Wagner’ Law. However, increase in GDP (i.e. Square of GDP) has an
adverse impact on economic growth. This shows that GDP as a proxy for economic growth has a certain point
from which, any additional increase will reduce government spending. Therefore, the government needs to come
up with programs that will motivate small and medium enterprises at all levels of government. Hence, the
increase in GDP in the long run, tend to reduce government expenditure, which in turn prevents deficit
financing
This summary provides an overview of the document:
1) The document investigates the impact of monetary policy rate, interbank rate, and savings deposit on inflation rate in Nigeria from 2006-2014 using an autoregressive distributed lag model.
2) The results of the long-run model show that monetary policy rate, interbank rate, and savings deposit were all negatively and significantly affecting inflation rate during the period studied.
3) In the short-run, monetary policy rate and interbank rates were found to negatively and significantly determine inflation fluctuations, while savings deposit had a positive but insignificant impact.
Demand for money in hungary an ardl approach by nikolaos dritsakisBalaji Bathmanaban
This study examines the demand for money in Hungary using quarterly data from 1995 to 2010 within an autoregressive distributed lag (ARDL) framework. The results of the bounds test confirm a stable, long-run relationship between M1 real monetary aggregate, real income, inflation rate, and nominal exchange rate. Specifically, real income has a positive impact on money demand while inflation and exchange rates have negative impacts. Stability tests also reveal a stable money demand function over the period examined, indicating M1 is a suitable intermediate target for monetary policy in Hungary.
The main focus of this study is to investigate the impact of expansion in economic growth on
government expenditure in Nigeria covering the periods 1970 to 2012. Gross Domestic Product (GDP) was
used as a proxy for economic growth, and the GDP time series was decomposed using the partial sum approach
in order to achieve asymmetry in the variable. The asymmetric ARDL estimation technique was appropriately
employed in this study. The findings of this study revealed that expansion in economic growth has significant
impact on government expenditure in Nigeria. The study further provided evidence of long-run causality from
boom/expansion in economic growth to government expenditure in Nigeria but could not support any evidence
of short-run causality. The researcher recommended among others, that Governments in Nigeria should give
more impetus to policies that will guarantee sustainable economic growth.
The impact of the international price index on vietnam stock marketNghiên Cứu Định Lượng
- The document analyzes the impact of international price indices like gold, crude oil, and the S&P 500 market value (SP500) on Vietnam's stock market index (VNINDEX) from 2008 to 2013 using GJR-GARCH and ARDL models.
- The results show that SP500 has an immediate positive impact on VNINDEX, while lagged values of VNINDEX, crude oil prices, and SP500 also positively impact VNINDEX.
- The GJR-GARCH model found that positive and negative shocks to the market have similar effects on the variance of VNINDEX.
Financial Liberalisation and Economic Growth In Nigeria: An Empirical Analysisiosrjce
This document summarizes a study that empirically examines the relationship between financial liberalization and economic growth in Nigeria from 1981-2012. It begins by providing background on Nigeria's financial system and the gradual process of financial liberalization that began in 1986 and included deregulating interest rates and opening the banking sector to more private competition. The study uses three measures of financial liberalization - an index of financial openness, money supply as a share of GDP, and private sector credit as a share of GDP - to analyze the long-run and short-run relationship with economic growth. The results suggest there is a positive long-run equilibrium relationship between financial liberalization and growth, supporting the view that financial liberalization contributed to financial development and economic
Financial Development and Economic Growth Nexus in Nigeriaiosrjce
The study assessed the impact of financial development on economic growth in Nigeria using time
series data from 1970 to 2012. The Autoregressive Distributed Lag bounds testing approach to cointegration
was utilized for this study. The result from the ARDL model indicate that the variables for this study are
cointegrated while the error correction term appeared significant and confirms that short-run disequilibria are
corrected up to about 50 percent annually. The empirical results reveals that financial development exerts
positive and significant impact on economic growth in the long-run while trade liberalization variables exert
negative impact on economic growth in the long-run indicating non-competitive nature of non-oil domestic
products in the international market. In the short-run, domestic credit is insignificant which indicates a dearth
of investible funds in the economy. There is evidence that financial development policies influence economic
growth in the long-run and not in the short-run. This study among others recommends the urgent need to
implement policies that will strengthen the deposit mobilization and intermediation efforts in the banking system
in other to deepen the financial system. Nigerian trade performance should be improved through economic
diversification and further availability of funds to private sector at competitive interest rate in order to produce
internationally competitive products.
This document analyzes the relationship between economic growth and energy consumption in Nigeria using a multivariate cointegration approach. It tests for long-run cointegration and short-run causality between GDP, capital, labor, real exchange rate, and energy consumption at both aggregate and disaggregate levels. The empirical findings indicate long-run cointegration between the variables at aggregate and disaggregate levels, except for coal. In the short-run, Granger causality runs only from GDP to electricity consumption. The study proposes policies to address Nigeria's energy and development challenges, such as enhancing energy supply and efficiency, diversifying energy sources, and developing appropriate policies.
The choice of the exchange policies in the primary commodity exporting countr...Alexander Decker
This document analyzes the exchange rate policies of Morocco and estimates the equilibrium real exchange rate of the Moroccan Dirham. It uses an autoregressive distributed lag model to estimate the long-run relationship between the real exchange rate and macroeconomic fundamentals like terms of trade, degree of openness, government expenditure, and net capital flows. The results suggest that Morocco's fixed exchange rate regime adopted in 1973 is not responsible for its trade deficit or low export growth, as the Dirham's value is close to its equilibrium level. However, other factors may be contributing to Morocco's low economic performance. The document examines theories on how exchange rates and macroeconomic variables interact and equilibrium exchange rates are estimated.
The document discusses how to perform various mathematical operations and regressions in Excel and EViews. It explains how to add, subtract, multiply and divide columns or variables in both programs using functions like SUM, GENR. It also explains how to calculate logs and perform simple and multiple linear regressions by using the regression tool in Excel or by writing commands like LS in EViews.
Dynamic linkages between transport energy and economic growth in mauritiusAlexander Decker
This document summarizes a journal article that investigates the relationship between transport energy consumption and economic growth in Mauritius from 1970 to 2010. It finds a unidirectional causality from economic growth to transport energy consumption in the long run, indicating that increased economic activity leads to higher energy use for transport. However, it also finds a bidirectional relationship between transport energy and investment, suggesting that restricting energy use could negatively impact investment and long-term growth. The article discusses the implications of these results for energy and climate policy in Mauritius.
6. bounds test for cointegration within ardl or vecm Quang Hoang
This document discusses using the bounds test approach within an autoregressive distributed lag (ARDL) model to test for cointegration and causality between time series variables. The ARDL model estimates error correction models involving the change in one variable (ΔYt or ΔXt) regressed on lags of itself and the other variable. The bounds test involves calculating an F-statistic and comparing it to critical value bounds - if the F-statistic exceeds the upper critical value bounds, then there is cointegration, and if it falls below the lower bounds, then there is no cointegration. The document provides the null and alternative hypotheses for the bounds test when each variable is the dependent variable in the error correction model. It also outlines the
Budget Deficit and Real Exchange Rate: Further Evidence From Cointegration an...Conferenceproceedings
This document provides an abstract for a paper presented at an economics conference that investigates the dynamic relationship between budget deficit and real exchange rate in Laos from 1980 to 2010. The study uses ARDL cointegration methodology, VAR, and SVAR analysis and finds no long-run relationship or Granger causality between budget deficit and real exchange rate in Laos. The purpose is to determine if increasing government spending from resource sectors leads to real exchange rate appreciation, a factor of the Dutch disease.
The research paper covers univariate and bivariate analysis, to study the relationship between Crude Oil and Bitcoin prices. Univariate analysis involved the study on effect of past price of bitcoin on it's future values using ARDL models. Multivariate analysis involved the estimation of causality among the variables and modeling the relationship accordingly. Breakpoint model was incorporated in order to capture the high volatility in the price of Bitcoin over the years.
Tác giả sử dụng mô hình GJR-GARCH và ARDL nghiên cứu với dữ liệu chuỗi thời gian bằng phương pháp thống kê và phân tích định lượng để đánh giá các tác động trên có xem xét tính đến độ trễ và các cú sốc thông tin trên thị trường
The role of cotton textile in the economic growth of pakistanAsia Rafique
This document discusses the cotton textile industry of Pakistan. It contains the following key points:
- The cotton textile industry is the backbone of Pakistan's economy, contributing significantly to GDP and exports. It is one of Pakistan's most important industries.
- Pakistan is a major global producer and exporter of cotton and cotton textiles. However, the industry faces challenges from fluctuating cotton prices and macroeconomic instability.
- The document examines the relationship between cotton textiles, GDP, and exports in Pakistan from 1975 to 2011 using econometric modeling. It finds the cotton textile industry has a positive impact on economic growth as measured by GDP.
- Pakistan's textile industry needs support through improved quality
Abstract: The theoretical relationship of the long-run equilibrium between real exchange rates and interest rate differentials is essentially derived from the Purchasing Power Parity (PPP) and the uncovered interest parity. However, empirical evidence on this long-run relationship has rather been inconclusive. While several authors are able to establish the long-run relationship between real exchange rates and interest rate differentials other could not found this relationship. The reason for lack of relationship in some of the studies is as a result of omitted variables (Meese and Rogoff, 1988). Therefore, attempt is made in this study to evaluate this relationship between real exchange rate and interest rate differential for the case of Nigeria by controlling for foreign exchange reserves. The paper uses monthly data for the period 1993:1-2012:12 and applies Autoregressive Distributed Lags (ARDL) model. The estimates suggest the existence of long-run relationship between real exchange rate, interest rate differential and foreign exchange reserves. In the long run, the exchange rate coefficient has a positive effect on the foreign reserves. However, the effect of interest rate differential is negative and statistically significant. On the short run dynamics, the finding indicates a non-monotonic relationship between real exchange rate, interest rate differential and foreign exchange reserves. The out-of-sample forecast indicates a better forecast using ARMA model as all Theil coefficients are close zero for all the horizons used in the model.
ARDL test...Tire Lyna is the only tire casing product that has been tested and passed by ARDL, one of the most recognized labs in the world for tire/rubber testing. The test was based on OEM test standards and TMC RP.
This test is a very powerful tool and MUST be used with ever potential customer.
ARDL test,,,EXECUTIVE SUMMARY:
The purpose of this work is to determine the effect of Tire Lyna on tire durability (particularly its effect on the inner-liner and plycoat compounds). The effect was measured on roadwheel tested tires with and without Tire Lyna. The tire integrity was measured by shearography before and after roadwheel testing. The tire surface running temperatures and inflation pressures were monitored. Tire component (innerliner and plycoat) mechanical properties were measured in new and tested tire with and without Tire Lyna.
The tire tread and sidewall surface temperatures were measured as a function of roadwheel time. The tire inflation pressures were measured as a function of roadwheel time. Slightly better pressure in the tire with Tire Lyna was observed at 15 days and at the end of the roadwheel testing.
The innerliner from the tire with Tire Lyna had slightly higher tensile strength and elongation to break, and slightly lower modulus than the tire without Tire Lyna. The tire with Tire Lyna had (significantly improved) lower hardness than the tire without Tire Lyna. The improved property retention is attributed to protection against oxidation provided by Tire Lyna
Ambient temperature was measured at each tire, both tires were within ASTM ambient temperature specification. JHNB1-22-2 (without Tire Lyna) starting conditions were 100PSI /90.5T andJHNB1- 22-1(with Tire Lyna) starting conditions were 100PSI /95.2°F. Average temperature during the roadwheel test for JHNB1-22-2 (without Tire Lyna) was 99.3°F and the average temperature for JHNB1-22-1(with Tire Lyna) was 100.4°F. At the end of the roadwheel test, tire JHNB1-22-2 (without Tire Lyna) had 108PSI at 100.2°F and tire JHNB1-22-1(with Tire Lyna) had 110PSI at 98.5°F. Slightly better pressure in the tire with Tire Lyna was observed.
The test started with Tire Lyna tire being higher in temperature. During the test the tire without Tire Lyna went up to 99.3F. An increase of 8.86% and the tire with Tire Lyna went up by 5.18%. At the end of the test the tire without Tire Lyna was recorded at 100.2F. An increase of 9.68%. At the end of the test the tire with Tire Lyna was recorded at 98.5 F. A decrease in temperature by almost 2%. The tire inflation pressures are shown in Figure 9. The tire with Tire Lyna provided consistently better (higher) inflation pressure retention during and at the end of the roadwheel testing
It clearly shows and proves that the tire with Tire Lyna will run cooler and if compared to tires run in the real world without Tire Lyna the temperature difference witnessed has been as high as 20%. Tire temperatures varies on speed, elevati
A Literature Review On The Relationship Between Foreign Direct Investment And...Audrey Britton
This document provides a literature review on the relationship between foreign direct investment (FDI) and economic growth. It discusses that while theories and studies have conflicting views on whether FDI boosts or hinders economic growth, most research finds that FDI can stimulate growth through technology transfers, productivity gains, and increasing capital stock and employment. However, some argue FDI may "crowd out" domestic investment or lead to external vulnerability. The document reviews several empirical studies that have found positive correlations between FDI and economic growth, technology diffusion, and domestic investment. Overall, it examines the complex debate around FDI's impact on host country economies.
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.
Foreign Direct Investment (FDI) Flows in Nigeria: Pro or Economic Growth Averse?iosrjce
This study investigates the empirical relationship between Foreign Direct Investment and economic
growth in Nigeria. The work covered a period of 1981-2009 using an annual data from Central Bank of Nigeria
statistical bulletin. A growth model via the Ordinary Least Square method was used to ascertain the relationship
between FDI and economic growth in Nigeria. The study also added Gross Fixed Capital Formation with a
view to capture theeffect of domestic investment on the growth of the economy for the period under review.
Interest Rate and exchange rate were also added as control variables in the model. Granger causality test was
also employed to determine the direction of causality between FDI and economic growth in Nigeria. The result
of the OLS techniques indicates that FDI has a positive and insignificant impact on the growth of Nigerian
economy for the period under study. GFCF which was used as a proxy for domestic investment has a positive
and significant impact on economic growth.Interest rate was found to be positive and insignificant while
exchange rate positively and significantly affects the growth of Nigeria economy. Therefore, government should
provide an enabling environment that will encourage foreign investors to invest in Nigeria economy by
addressing the security challenges in the country, providing investment friendly environment by improved
regulatory framework as well as encourage domestic investment.
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.
This document discusses foreign direct investment (FDI) in India, particularly in the retail sector. It provides an overview of the history of FDI policy in India and reviews economic literature on the impacts of FDI. While FDI can potentially bring benefits like capital, technology, and efficiency, studies have found mixed results on its actual impacts. Some studies have found FDI has negatively impacted growth in developing countries by crowding out local firms or draining capital through profit repatriation. Overall, the literature suggests FDI's effects depend on factors like the sector and whether a country achieves a minimum threshold of human capital. Studies on India have also found limited positive impacts of FDI on growth, exports, and productivity
Fdi in india:An analysis on the impact of fdi in india’s retail sectorSubhajit Ray
The document discusses trends in foreign direct investment (FDI) in India. It analyzes literature on the economic impacts of FDI and summarizes India's policies toward FDI over time. Key points include:
1) Studies have found mixed results on the economic impacts of FDI, with some finding benefits like technology transfer and others finding weak or negative spillover effects.
2) India initially had restrictive FDI policies but began liberalizing in the 1990s, allowing greater foreign equity ownership and automatic approvals in many sectors.
3) Actual FDI inflows to India have increased steadily since 1991 reforms, though growth has been slower than some other countries. In recent years India has gained a
In their search for sustainable development and endurable development strategies, neo-colonial economies of the Third World and Africa in particular gloss over massive corruption in public office and sit-tight syndrome of leaders. Rather, since attaining independence in the 1950s and 60s, their leaders have tinkered with several development strategies drawn from both the capitalists and socialist models. In all of these, development has remained a far cry as a result of many challenges faced by these economies. Strategies ranging from indigenization to export promotion and import substitution of the 1960s, to privatization and structural adjustment of the 1980s and Foreign Direct Investment of the 1990s have been experimented with varying degrees of success. Little has been done in the area of checking financial corruption and abuse of office by public office holders, building of strong institutions from which economic oriented strategies can be rooted and checking tenure elongation by leaders of states. The results have been huge failures and frustration on the part of development partners. This paper has attempted a survey approach to Foreign Direct Investment as a way out of structural imbalances of neo-colonial economies. Basing this examination on Nigeria, findings have shown that Foreign Direct Investment can work for development only if host government regulate the activities of foreign investors and also create enabling environment for investment to yield expected results.
The Impact of Investment on Nigeria Economy 1970 – 2012iosrjce
Foreign direct investment has impacted Nigeria's economy from 1970 to 2012. The study found that foreign investment leads to economic growth in Nigeria through technology transfers and skills development. Lower inflation, good infrastructure, political stability, and reduced corruption can attract more foreign investment and help Nigeria realize greater economic benefits. The key recommendation is for Nigeria to improve infrastructure and policies to create a better business environment to stimulate growth through foreign investment inflows.
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.
This document discusses foreign direct investment (FDI). It defines FDI and outlines several theories that attempt to explain why it occurs, such as companies investing in other countries due to differences in capital abundance or seeking cheaper labor costs. The document also discusses the different forms FDI can take, such as greenfield investment, mergers and acquisitions, or brownfield investment. It then covers strategies multinational companies use for FDI, such as adopting cost-cutting or differentiation approaches. Finally, it outlines some benefits and costs of FDI for both home and host countries.
Foreign direct investment can have both positive and negative impacts on the labor markets of developing economies. Positively, FDI increases competition which leads domestic companies to increase productivity and offer higher wages to attract skilled workers. This growth in productivity can also lead to more job creation. However, FDI can also increase wage inequality as foreign firms hire more skilled workers and pay them higher wages than domestic firms can offer. Over time, this can worsen gaps in wages and skills between employees in foreign and domestic companies. For developing economies to fully realize the benefits of FDI, governments need policies that encourage skills and capability development among domestic firms.
Why foreign direct investment goes towards central africaAlexander Decker
This document examines the determinants of foreign direct investment (FDI) in Central Africa. It finds that (1) high GDP growth rates attract more FDI to the region, (2) natural resources like oil production also promote FDI inflows, and (3) other factors like human capital, trade openness, and infrastructure development can further increase a country's attractiveness for FDI. The study recommends that governments intensify anti-corruption efforts, encourage private investment, and modernize infrastructure to facilitate business.
The document discusses foreign direct investment (FDI) and multinational corporations. It examines the article "FDI and Multinationals: Patterns, Impacts and Policies" by A.T. Tavares and S. Young. The document summarizes key points from the article, including the main drivers for firms to engage in FDI, such as accessing new markets or resources. It also classifies FDI based on factors like ownership structure and firm motives. The impacts of FDI from the perspective of host and home countries are outlined, noting concerns about national welfare as well as potential benefits from technology transfer and competitive pressures spurring efficiency.
Review of FDI Policies in India and China: Analysis and InterpretationVandanaSharma356
Foreign Direct Investment (FDI) is a wide word that encompasses any long-term investment made in the host nation by a non-resident enterprise. Typically, the investment is undertaken over a lengthy period of time with the purpose of maximizing the host nation's advantages, such as superior (and cheaper) resources, consumer market access, or direct access to the host country. All talent improves efficiency. This long-term cooperation will benefit both the investor and the host nation. If the investor makes the same investment in his own nation, he will obtain a larger return, but the host country will profit by boosting the transfer of knowledge or technology to its workforce, putting more pressure on his local business to compete. Foreign firm that can develop the sector as a whole or serve as an example for other companies thinking about investing in the host nation.
Abnormalities of hormones and inflammatory cytokines in women affected with p...Alexander Decker
Women with polycystic ovary syndrome (PCOS) have elevated levels of hormones like luteinizing hormone and testosterone, as well as higher levels of insulin and insulin resistance compared to healthy women. They also have increased levels of inflammatory markers like C-reactive protein, interleukin-6, and leptin. This study found these abnormalities in the hormones and inflammatory cytokines of women with PCOS ages 23-40, indicating that hormone imbalances associated with insulin resistance and elevated inflammatory markers may worsen infertility in women with PCOS.
A usability evaluation framework for b2 c e commerce websitesAlexander Decker
This document presents a framework for evaluating the usability of B2C e-commerce websites. It involves user testing methods like usability testing and interviews to identify usability problems in areas like navigation, design, purchasing processes, and customer service. The framework specifies goals for the evaluation, determines which website aspects to evaluate, and identifies target users. It then describes collecting data through user testing and analyzing the results to identify usability problems and suggest improvements.
A universal model for managing the marketing executives in nigerian banksAlexander Decker
This document discusses a study that aimed to synthesize motivation theories into a universal model for managing marketing executives in Nigerian banks. The study was guided by Maslow and McGregor's theories. A sample of 303 marketing executives was used. The results showed that managers will be most effective at motivating marketing executives if they consider individual needs and create challenging but attainable goals. The emerged model suggests managers should provide job satisfaction by tailoring assignments to abilities and monitoring performance with feedback. This addresses confusion faced by Nigerian bank managers in determining effective motivation strategies.
A unique common fixed point theorems in generalized dAlexander Decker
This document presents definitions and properties related to generalized D*-metric spaces and establishes some common fixed point theorems for contractive type mappings in these spaces. It begins by introducing D*-metric spaces and generalized D*-metric spaces, defines concepts like convergence and Cauchy sequences. It presents lemmas showing the uniqueness of limits in these spaces and the equivalence of different definitions of convergence. The goal of the paper is then stated as obtaining a unique common fixed point theorem for generalized D*-metric spaces.
A trends of salmonella and antibiotic resistanceAlexander Decker
This document provides a review of trends in Salmonella and antibiotic resistance. It begins with an introduction to Salmonella as a facultative anaerobe that causes nontyphoidal salmonellosis. The emergence of antimicrobial-resistant Salmonella is then discussed. The document proceeds to cover the historical perspective and classification of Salmonella, definitions of antimicrobials and antibiotic resistance, and mechanisms of antibiotic resistance in Salmonella including modification or destruction of antimicrobial agents, efflux pumps, modification of antibiotic targets, and decreased membrane permeability. Specific resistance mechanisms are discussed for several classes of antimicrobials.
A transformational generative approach towards understanding al-istifhamAlexander Decker
This document discusses a transformational-generative approach to understanding Al-Istifham, which refers to interrogative sentences in Arabic. It begins with an introduction to the origin and development of Arabic grammar. The paper then explains the theoretical framework of transformational-generative grammar that is used. Basic linguistic concepts and terms related to Arabic grammar are defined. The document analyzes how interrogative sentences in Arabic can be derived and transformed via tools from transformational-generative grammar, categorizing Al-Istifham into linguistic and literary questions.
A time series analysis of the determinants of savings in namibiaAlexander Decker
This document summarizes a study on the determinants of savings in Namibia from 1991 to 2012. It reviews previous literature on savings determinants in developing countries. The study uses time series analysis including unit root tests, cointegration, and error correction models to analyze the relationship between savings and variables like income, inflation, population growth, deposit rates, and financial deepening in Namibia. The results found inflation and income have a positive impact on savings, while population growth negatively impacts savings. Deposit rates and financial deepening were found to have no significant impact. The study reinforces previous work and emphasizes the importance of improving income levels to achieve higher savings rates in Namibia.
A therapy for physical and mental fitness of school childrenAlexander Decker
This document summarizes a study on the importance of exercise in maintaining physical and mental fitness for school children. It discusses how physical and mental fitness are developed through participation in regular physical exercises and cannot be achieved solely through classroom learning. The document outlines different types and components of fitness and argues that developing fitness should be a key objective of education systems. It recommends that schools ensure pupils engage in graded physical activities and exercises to support their overall development.
A theory of efficiency for managing the marketing executives in nigerian banksAlexander Decker
This document summarizes a study examining efficiency in managing marketing executives in Nigerian banks. The study was examined through the lenses of Kaizen theory (continuous improvement) and efficiency theory. A survey of 303 marketing executives from Nigerian banks found that management plays a key role in identifying and implementing efficiency improvements. The document recommends adopting a "3H grand strategy" to improve the heads, hearts, and hands of management and marketing executives by enhancing their knowledge, attitudes, and tools.
This document discusses evaluating the link budget for effective 900MHz GSM communication. It describes the basic parameters needed for a high-level link budget calculation, including transmitter power, antenna gains, path loss, and propagation models. Common propagation models for 900MHz that are described include Okumura model for urban areas and Hata model for urban, suburban, and open areas. Rain attenuation is also incorporated using the updated ITU model to improve communication during rainfall.
A synthetic review of contraceptive supplies in punjabAlexander Decker
This document discusses contraceptive use in Punjab, Pakistan. It begins by providing background on the benefits of family planning and contraceptive use for maternal and child health. It then analyzes contraceptive commodity data from Punjab, finding that use is still low despite efforts to improve access. The document concludes by emphasizing the need for strategies to bridge gaps and meet the unmet need for effective and affordable contraceptive methods and supplies in Punjab in order to improve health outcomes.
A synthesis of taylor’s and fayol’s management approaches for managing market...Alexander Decker
1) The document discusses synthesizing Taylor's scientific management approach and Fayol's process management approach to identify an effective way to manage marketing executives in Nigerian banks.
2) It reviews Taylor's emphasis on efficiency and breaking tasks into small parts, and Fayol's focus on developing general management principles.
3) The study administered a survey to 303 marketing executives in Nigerian banks to test if combining elements of Taylor and Fayol's approaches would help manage their performance through clear roles, accountability, and motivation. Statistical analysis supported combining the two approaches.
A survey paper on sequence pattern mining with incrementalAlexander Decker
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Socio political instability and foreign direct investments in ghana an ardl approach.
1. Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.3, No.13, 2012
Socio-Political Instability and Foreign Direct Investments in
Ghana:An ARDL Approach.
Yakubu Abdul-Salam
Department of Economics, University of Aberdeen, EWF04, Dunbar Street, AB24 3QY, UK
* E-mail of author: y.abdulsalam@abdn.ac.uk
Abstract:
This paper aims to examine the impact of unstable socio-political periods, characterised by national elections, on
foreign direct investments (FDIs) in Ghana. Since the inception of multiparty democracy in 1992, the country
had undergone five national elections. These elections however are often characterised by heightened socio-
political tensions among opposing parties and have resulted in civil unrest, mass arson, even deaths in the past.
During this period the country had also implemented numerous policies to encourage FDIs. Has the unstable
socio-political climate during electioneering periods impacted upon the inflow of FDIs in the country; and to
what extent? This paper adopts the robust Autoregressive Distributed Lag (ARDL) Bounds cointegration
approach as developed by Pesaran et al (2001) in its analysis. The results indicate that socio-political instability
exerts a negative influence on FDIs in Ghana in the short- and long-run. In conclusion the paper recommends
that in order to maintain its competitiveness as a FDI hub in the West Africa sub region and indeed the world,
Ghana needs to work at limiting the often high tensioned national mood that is suggestive of a country teetering
towards implosive violence and civil unrest during its national electioneering seasons.
Keywords: Ghana, Foreign direct investments, socio-political instability, cointegration.
1. Introduction
The International Monetary Fund (IMF) defines FDIs as the ‘net inflows of investment to acquire a lasting
interest in or management control over an enterprise’ (IMF, 2010) in a country that is foreign to an investor or
firm. Accounting standards stipulate that FDIs are itemised on countries’ balance of payments records and are
computed as the ‘sum of equity capital, reinvested earnings and other long term and short term’ (IMF, 2010)
assets and transactions by foreign entities in a country. FDIs are a major stimulant to economic growth in
developing countries due to its ability to impact host economies through provision of financing for investment
and capital formation, transfer of good business management skills and access to international markets among
others. They are a phenomenon of globalisation and policy makers in developing countries including Ghana have
emphasized FDIs in their developmental agenda in order to further integrate with other world economies.
Globally there are over 160 investment promotion agencies which are vehicles that individual governments
use to promote FDIs (UNCTAD, 2001) in their respective countries. As a consequence of this global competition,
Ghana over the last three decades had implemented policies to create the enabling environment to attract FDIs
into the country. In 1983, the Ghana Economic Recovery Program (ERP) was formed under the auspices of the
World Bank and the IMF. Under the program, international events tailored at encouraging FDIs including the
African-American Summit(s) and the Pan African Investment Summit(s) and international investment missions
have been sponsored. Subsequent governments have considered the ERP a major part of the country’s
developmental agenda (Abdulai, 2005). Among the steps the government of Ghana took in the 1990s to further
boost investor confidence and the private investment climate in the country was to undertake a privatisation
program to transition quickly to a more liberalised market economy. The government of Ghana via the program
promoted private enterprise and actively engaged local and foreign private entities to invest in the country. The
program which was implemented by the Divestiture Implementation Committee (DIC) saw equity in two thirds
of the country’s many state owned firms acquired by a majority of foreign investors in partnership with a few
local investors (Abdulai, 2005). Successive governments have since privatised more public companies and
sectors which were hitherto closed to foreign investors have now been opened for access. In 1994, the Ghana
Investment Promotion Centre (GIPC) Act was enacted into law to monitor investments in most sectors of the
economy and to oversee FDIs aimed at major mergers, acquisitions and takeovers of Ghanaian public and
strategic private firms. The law provides investors with the legal framework they need to ensure confidence in
the country.
Despite the country’s active promotion of FDIs however, there are numerous economic and social factors
that may hinder the success of these efforts. These may include socio-political instability, access to land, red tape
in property registration, corruption, access to skilled labour, labour productivity, etc. This study investigates the
impact of unstable socio-political periods on FDIs in Ghana. These periods are characterised by national
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elections which began, for the country’s fourth republic, in 1992. Section II reviews the literature on FDIs in
Ghana whilst Section III discusses the data and methodology used. In Section IV the results of the analysis are
discussed. Section V concludes with recommendations inferred from the findings of the study.
2. Literature Review
2.1 Theoretical Review
There are three major theoretical approaches to the phenomenon of FDIs in the literature (Abdulai, 2005). The
first bracket of theories seeks to explain why a firm would have a preference for FDIs as opposed to franchising
or exporting its brand or product. Prominent in this bracket of theories is the Internationalisation theory (Hymer,
1972) which posits that firms may prefer FDIs because licensing may lead to losing intellectual property that is
critical to a firm’s competitiveness and going concern. Again licensing may lead to the firm losing control over
production quality and marketing which is critical to its brand. The second bracket of theories seek to posit on
why firms in similar industries often undertake FDIs at the same times and locations; and why certain locations
are favoured over others. Knickerbocker (1973) expounds on this phenomenon by positing that firms in
oligopolistic industries follow their domestic competitors overseas due to imitation of one another’s strategies.
Another theory in this bracket is the Product Life Cycle hypothesis propounded by Vernon (1966) which states
that firms invest in foreign countries at certain stages in the life cycle of their products because local demand
abroad is enough to support local production. In this sense, firms in similar industries at similar product life
stages may end up investing in the same locations because they conclude simultaneously about the viability of
their products in these locations.
The most prominent theory to posit on FDIs perhaps is the Eclectic Paradigm theory as developed by
Dunning (1977) and Dunning (1988). This theory, constituting the third bracket of theories, attempts to integrate
the two approaches above into a holistic framework. The theory states that the extent, geography and
composition of FDIs by a multinational firm is determined by the interaction of three sets of interdependent
variables (Dunning, 2001). This is expressed mathematically as;
where
O ownership
L location
I Internalisation
The ownership variable suggests that the greater the competitive advantage of a firm relative to its
competitors, the more likely the firm is to engage in FDIs rather than licensing or exporting its brand or product
(Dunning, 2001). The location variable posits that firms are more likely to engage in FDIs when the resources
they need as factors of production are immobile and plentiful in foreign countries. Lastly the internalisation
variable suggests that the greater the gains from international investments, the more probable a firm will engage
in FDIs.
2.2 Empirical Review:
Singh et al (1995) found that a key determinant for FDIs into countries that have historically attracted low FDIs
is socio-political instability. Chan et al (2004) studied determinants of FDI inflows and found that the degree of
instability in a country is a much more critical determinant for FDI inflows into the Middle East and North
African Regions than it is for many developing countries. The most cited study on the determinants of FDIs in
Ghana is perhaps the study by Tsikata et al (2000). They identified FDI inflows in Ghana as having evolved over
three separate periods. They noted that the period 1983-88 saw sluggish inflows of FDIs into Ghana. The annual
inflow averaged about US$ 4 million with the minimum and maximum inflows being US$ 2 million and US$ 6
respectively. The second period spanned the years 1989-92 and saw moderate inflows of FDIs in the country.
The inflows averaged US$ 18 million per annum with highest inflow being US$ 22 million. The third period
identified by Tsikata et al (2000) spanned the period 1993-1996 which witnessed significant but oscillatory
inflows of FDIs in the country. The FDI inflows into the country in this period peaked in 1994 with a recorded
inflow of about US$ 233 million. Tsikata et al (2000) determined that among the factors accounting for the
evolution of FDIs in the three periods are economic growth and political stability.
More recent studies on Ghana have determined the impact of several variables on FDIs in the country. A
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study by Djokoto (2012) determined that FDI inflows particularly into the agricultural sector in Ghana had a
statistically significant short-run and long-run relationship with imports. Djokoto (2012) concluded that there is a
negative relationship between these variables indicating that more imports repel FDIs. Exports were found to
have a negative but statistically insignificant relationship with FDIs. In another recent study, Djokoto (2012)
investigated the effect of investment promotion on FDIs in Ghana and concluded that indeed schemes to promote
investments did have a positive but statistically insignificant impact on FDIs in the country. Nyarko et al (2011)
studied the impact of exchange rates on FDIs and determined that exchange rates had no significant effect on
FDIs in Ghana. A study by Dah et al (2010) established that FDIs had a positive relationship with locational
attraction. Locational attraction had two components in their analysis; access to natural resource and market size.
Their study concluded that natural resource attracted more FDIs than market size.
3.0 Methodology and Data
3.1 The Empirical Model Specification
Why would a firm invest internationally? As outlined in Section 2.1 above, there are different competing
theories. Consider however a firm whose underlying objective is to minimise its costs of production and is well
capable of producing domestically and/or abroad. The firm must decide how much of domestic and foreign
production will minimise their overall costs. The optimisation problem of the firm can be set up as follows
(Djokoto, 2012);
where C is total cost of domestic and foreign production of the firm, D is the total demand for the firm’s product
in the domestic and foreign markets, and are the unit costs of production in domestic and foreign plants
respectively and and are the quantities produced in domestic and local plants respectively. The firm by the
above problem seeks to find the optimal mix of production in domestic and foreign plants. It can be shown via
the Lagrangian solution method that the optimal allocation of production for the foreign plant is given as follows
(Djokoto, 2012);
where it is assumed that the coefficients of D and above are positive. The above results indicates that
the level of production a firm allocates overseas, , has a positive relationship with the total level of demand for
the firm’s product (i.e. D) in domestic and foreign markets, and the difference in the unit cost of production in
foreign and domestic plants . The firm after determining the optimal level of production, Qf, to be
allocated to a foreign plant will need to determine how much of the different factors of production to use in order
to produce at minimum cost. The firm does so by solving a second optimisation problem as follows;
where is the total cost of producing in the foreign plant; L and K are the factors of production labour and
capital respectively; w and k are the respective unit costs of L and K whilst a and b are coefficients. For
simplicity, it is assumed in equation 5 above that the firm’s production function conforms with the Cobb-
Douglas form and has only two factors of production, L and K. Using the Lagrangian solution method and
substituting equation 3 into equation 5, it can be shown that the optimal level of capital that minimises the firms
total cost, , for producing in a foreign plant is as follows (Djokoto, 2012);
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The above shows that the capital a firm allocates for foreign production has a positive relationship with the total
demand for its product, D and a negative relationship with the relative costs of foreign production. K in equation
6 above is the amount of capital the firm allocates for foreign production. K is therefore an excellent proxy for
FDI inflows into a country. Several authors including Bajo-Rubio et al (1994), Marchant et al (2002), Sosvilla-
Rivero (1994 and Djokoto (2012) substitute K in equation 6 above with FDI and augment the right hand side of
equation 6 with variables that capture demand (D) and the cost of doing business internationally, . Many
variables have been used in the literature to augment the right hand side of equation 6 above, hence yielding
different functional forms. It is reasonable to conclude that authors choose variables that can reasonably be
construed to affect FDIs and are relevant to the research question. Among the variables used in the literature
include gross domestic product (GDP) and GDP per capita (GDPPC) to capture the firms demand abroad; and
interest rate (IR), exchange rates (ER), and inflation rate (INFL) to capture the cost of doing business. In this
study, convention is followed by substituting K for FDI. The right hand side of the equation 6 is augmented with
GDP per capita and inflation rate to yield the following functional form;
where gdppc (current US $) is the GDP per capita and infl is inflation rate (consumer prices, annual %). The two
variables, GDP per capita and inflation rate were chosen for two reasons. Firstly, GDP per capita perfectly
captures demand in equation 6 whilst inflation captures the cost of doing business. Both variables have been
cited in the literature to have significant impacts on FDIs. Secondly the relatively short period considered for this
study (1992-2010) yields a very small sample size thus few predictors are selected to avoid the problem of
multicollinearity.
3.2 Data Sources and Description
All data were obtained from the World Development Index database (WDI, 2012). Data used spanned the years
1992 to the year 2010. In this period, Ghana underwent five national elections in 1992, 1996, 2000, 2004 and
2008. A dummy variable, elections is introduced in equation 7 to capture the effect of socio-political instability
in the period. elections is assigned a value of 1 in the periods elections were held in Ghana, and 0 otherwise. A
logarithmic transformation of the functional form in equation 7 above was undertaken in order to transform the
coefficients of the predictor variables into constant elasticities thus facilitating the discussion of the results.
There’s another advantage to logarithmic transformation of the variables. It can reduce the problem of
heteroscedasticity in the model because it compresses the scale in which all variables are measured thereby
reducing a tenfold difference between two values to a twofold difference (Gujarati, 1995). The substantive
estimable econometric model is formulated as follows;
where all variables are as previously defined, ln is natural logarithm and is the error term.
3.3 Theoretical and a Priori Assumptions
GDP per capita is employed in equation 8 to capture the aggregate demand in the Ghanaian economy. It is
expected a priori that demand hence GDP per capita will exert a positive effect on FDIs due to its contribution to
increased economic activity and business opportunity hence . Inflation on the other hand may have either
a positive or a negative effect on FDIs. The ambiguity stems from the fact that under one scenario, inflation may
dampen FDIs due to its negative effects on the real value of money and currency depreciation. In this respect
inflation can repel FDIs thus may be expected a priori to have a negative exertion i.e . On the other hand
foreign investors may be attracted to a country due to the high prices induced by inflation. In this respect,
inflation can be expected a priori to be positive i.e. . Indeed this ambiguity can be further explained if
inflation is induced by excessive government expenditure for example. Government spending may crowd-out
FDIs via increased deficits and high interest rates as posited by the Ricardian Equivalence Theorem thus exerting
a negative influence on FDIs i.e. .. However, inflation induced by excessive government expenditure may
also serve as a crowding-in catalyst because the provisions of infrastructure like roads, utilities, etc. through
these expenditures can facilitate the investment environment. In this case inflation would be expected to have a
positive exertion on FDIs hence .
Finally the coefficient of elections, a proxy for socio-political instability is expected to be negative ie .
This is because the heightened national mood that is suggestive of a civil unrest in waiting during electioneering
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periods is indicative of high investment risks, a situation risk-averse investors will like to avoid by decreasing
their investments or in some cases pulling out of the country.
3.4 ARDL Bounds Cointegration Test
The ARDL Bounds cointegration test was first developed by Pesaran and Shin (1999) and later extended by
Pesaran et al (2001). It has been used extensively in the literature for three reasons. Firstly, unlike the Johansen-
Juselius cointegration test, it allows for cointegration testing even when all variables are integrated of order I(0)
or I(1), or a mix of the two. Secondly it is not sensitive to the values of error parameters hence making it ideal
for small sample estimation. Lastly, the ARDL Bounds approach is proven to provide unbiased long run
estimates with valid t-statistics even when some of the cointegrated variables are endogenous (Amusa et al,
2009). The above features makes the ARDL Bounds approach to cointegration ideal for use in this paper since
particularly the data sample is small and the variables are a mix of I(0) and I(1) (see Table 1).
The first stage of the ARDL Bounds approach involves formulating the unrestricted error correction model
(UECM) given in this case as follows;
where is the first difference operator.
A maximum of one lag with no constant was chosen for the UECM above. The Bounds cointegration test
involves restricting the parameters of lag level variables in the UECM above to zero. The set up for such a
restriction is as follows;
Null hypothesis No long run relationship
Alt. hypothesis Long run relationship exists
The f-statistic of the above restriction is then tested against the Pesaran et al (2001) critical value bounds for
ARDL cointegration. Once cointegration is established among the variables, the long run relationship of the form
in equation 8 can be estimated. The last stage of the ARDL Bounds cointegration approach involves estimating
the error correction model (ECM) expressed as follows (Adom, 2011);
where x is k x 1 vector of explanatory variables, w is deterministic term and ECTt is the error correction term.
computes the model’s speed of convergence to equilibrium whilst the remaining coefficients relate the
model’s short run dynamics.
4. Results
4.1 Unit root Tests:
Table 1 shows the result of the unit root test for stationarity in all variables using the Augmented Dickey Fuller
(ADF) method with Akaike Information Criterion (AIC). As can be seen, all the variables but LFDI are non-
stationary at level but stationary at first difference whilst LFDI is stationary at level. The variables are therefore a
mix of I(0) and I(1) hence justifying the use of the ARDL Bounds cointegration approach.
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Table 1: Augmented Dickey Fuller Test of Unit root
Variables ADF-Statistic P-value Implication Lag lenth
LFDI 2.814265 0.0760* Stationary 1
DLFDI -4.559821 0.0027 Stationary 1
LGDPPC 0.262499 0.9689 Non stationary 1
DLGDPPC -3.120738 0.0440 Stationary 1
LINFL -2.608457 0.1095 Non stationary 1
DLINFL -4.359345 0.0053 Stationary 1
*test indicates stationary series at the 10% significance level.
4.2 Bounds Cointegration Test
Table 2 shows the results of the Bounds cointegration test. The section of the Pesaran et al (2001) critical bounds
table used is ‘No Intercept and No Trend’ since the unrestricted error correction model in equation 9 included no
intercept and no trend. From Table 2, since the F statitisc is significant (p value < 5%) and higher than the upper
bound of the bounds critical values for k= 3 at 5% significance level, we conclude that there is cointegration
among the variables.
Critical Value Bounds of F-Statistic (No Intercept and No Trend; Case II)
k 90% level 95% level 99% level
I(0) I(1) I(0) I(1) I(0) I(1)
3 2.022 3.112 2.459 3.625 3.372 4.797
F-statistic from UECM restriction is 5.234; p-value = 0.002
Table 2: Cointegration test.
4.3 Results of the Long Run ARDL Model of FDIs in Ghana
Having established cointegration of FDIs and its determinants, the long run ARDL model can be estimated. The
long run model in Table 3 below was chosen based on the AIC criterion with a maximum of 1 lag given the
relatively short data series and its annual nature. The full ARDL model is in Appendix 1.
ARDL (1,0,1,0) selected based on AIC Dependent variable: LFDI
Regressor Coefficient Standard error T-Ratio P-value
LGDPPC .70069 .25698 2.7266 .016
LINFL -1.0893 .51480 -2.1160 .053
ELECTIONS -.072279 .24116 -.29971 .769
Table 3: Estimated long run coefficients using ARDL using ARDL Approach.
In the above result, the a priori expectation of a positive relationship between GDP per capita and FDI is realised.
The results indicate that a percentage increase in GDPPC in the long run would increase FDIs by about 0.70%.
This determination is statistically significant at the 5% significance level and shows that indeed economic
growth and higher income of the citizenry can stimulate FDIs in Ghana. The result is consistent with the findings
of several authors in the literature including Djokoto (2012), Morisset (2000, 2003) and Dah et al (2010).
The relationship between FDIs and inflation in the long run was hypothesised a priori to be ambiguous. The
results above shows that the relationship in Ghana in the long run is in fact negative which implies that a
percentage increase in inflation repels FDIs by about 1.09%. If inflation is induced by excessive government
expenditure for example, negative exertion will indicate a crowding-out effect as a consequence of government
deficit/debt and high interest rates in the economy (see Ricardian Equivalence Theorem). The negative exertion
is statistically significant at the 10% significance level. This result is consistent with some empirical findings
including Were (2001). It however contradicts the finding of Djokoto (2012) and Acosta (2005) who find that
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inflation has a positive exertion on FDIs in the long run. Finally, in the long run an election (a proxy for socio-
political instability) does impose a negative impact on FDIs in Ghana. Though the result is not statistically
significant, it has significant practical importance. The result shows that in the long run an electioneering event
will decrease FDIs in the country by 0.0722%. This finding is not unreasonable and was expected a priori.
Investors value certainty and stability. The inception of highly toxic socio-political periods as is the case in
Ghana during elections has the potential to raise the risk that risk-averse investors attach to assets in the country.
As a consequence, these investors expect much higher return to account for the increased risks. If these high
returns are not achievable, they are likely to decrease or pull out their investments from the country. The result
concurs with the finding of Singh et al (1995) and Chan et al (2004).
4.4 Results of the Short Run Dynamic Model
The last stage of the ARDL approach involves estimating the short run relationship between the variables as
shown in Table 4 below;
ARDL (1,0,1,0) selected based on AIC Dependent variable: DLFDI
Regressor Coefficient Standard error T-Ratio P-value
DLGDPPC .32875 .098418 3.3403 .004
DLINFL .046727 .22966 .20347 .842
DELECTIONS -.033911 .11364 -.29840 .769
ECM(-1) -.46917 .14253 -3.2918 .005
Estimated Short run Error Correction Model using ARDL Approach.
As was expected a priori and confirmed in the long run result in Section 4.3 above, GDP per capita has a positive
and statistically significant exertion on FDIs in the short run. The result shows that a percentage increase in the
GDP per capita causes FDIs to increase by 0.32%. The result is consistent with the findings of Djokoto (2012).
Further, contrary to the finding in the long run model where inflation was found to have a negative or crowding-
out effect on FDIs, in the short run inflation is shown to have a positive or crowding-in effect on FDIs in Ghana.
Though this result is statistically insignificant, it concurs with the findings of Morisset (2000, 2003), Dah et al
(2010) and Djokoto (2012). The short run ECM model predicts that a percentage change in inflation causes FDIs
to increase by 0.047% in the short run.
Finally the short run effects of elections on FDIs are negative as was the case in the long run model above.
Electioneering periods therefore decrease the inflow of FDIs by about 0.03% though this effect is statistically
insignificant. The error correction term indicates the speed of adjustment of FDIs when there is instability. It
shows that in Ghana when there is a shock in the FDI sector, convergence to equilibrium is relatively high with
about 47% of adjustments occurring in the first year.
5. Conclusion
The short and long run responsiveness of FDIs to inflation is interesting. Whereas the response is positive in the
short run, it tends to be negative in the long run. This may mean that FDIs are positively inclined to high prices
in the short run as this provides opportunities for bigger returns on investments. Persistent inflation however
increases the costs of doing business in the long run and so FDIs tend to respond negatively to inflation with
time. This is a plausible explanation for the results above. GDP per capita was found to exert a positive and
statistically significant relationship with FDIs both in the short run and in the long run. This result has been
widely obtained in the literature.
This paper investigated the effects of unstable socio-political periods on FDIs in Ghana. These periods are
characterised by high tensioned national elections which often lead to disputes among opposing parties;
sometimes leading to mass arson, even deaths. It was a priori hypothesised that these periods will negatively
affect the FDI environment in the country. This paper confirms this hypothesis by finding evidence of a negative
relationship between FDIs and elections (socio-political instability) in the country. Though the relationship
between FDIs and elections in Ghana both in the short-run and long-run are statistically insignificant, they are of
practical importance and so the government should take steps to reduce the toxic political rhetoric that induces
tensions among opposing parties in the country during elections. In so doing the country could position itself as a
socio-politically stable hub in the West Africa sub region in order to be a preferable location for FDIs.
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Appendix 1
Table 5: Full ARDL Results.
ARDL(1,0,1,0) selected based on Akaike Information Criterion Dependent variable: LFDI
Regressor Coefficient Standard Error T-ratio P-value
LFDI(-1) 0.53083 0.14253 3.7244 0.002
LGDPPC 0.32875 0.09841 3.3403 0.005
LINFL 0.04672 0.22966 0.2034 0.842
LINFL(-1) -0.55779 0.24612 -2.2663 0.04
ELECTIONS -0.033911 0.11364 -0.2984 0.77
R-Squared 0.69185
S.E. of Regression 0.21673
F-Stat. F(4,14) 7.85820
Akaike Info. Criterion -0.0059
80
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