Pdf foreign portfolio investment on economic growth of nigeria. Impact of foreign direct investment on the economic growth. Pdf the economic growth imperative of foreign portfolio. The research design adopted was a combination of exploratory and ex post facto research designs. This study mainly focuses on analyzing the short run relationships between the causal variables mainly fdi and economic growth. An empirical analysis of kenyan data daniel o abala, phd. Fdi inflows are often seen as important catalyst for economic growth in the developing countries. Difference between foreign direct investment and foreign. Foreign portfolio investment, economic growth, granger causality. Hence this research seeks to find the relationship and impact of interest rates on fdi inflows. Last years world investment report highlighted the emerging structural impact of the digital economy on foreign direct investment. The aim of this study is to investigate and analyze the impacts of fdi and other drivers on economic growth in sub saharan africa.
Foreign portfolio investment fpi refers to investing in the financial assets of a foreign country, such as stocks or bonds available on an exchange. Pdf foreign portfolio investment on economic growth of. How does foreign direct investment promote economic. The current paper attempts to analyse the impact of foreign direct investment fdi on the economic growth of pakistan. One of the arguments for pursuing foreign direct investment fdi by countries is the belief that fdi bridges the gap between rich and poor nations by promoting economic growth and development in addition to generation of technological transfers. Pdf foreign portfolio investment and economic growth in. The impact of foreign capital inflows on economic growth and employment in egypt. The findings revealed that economic growth is directly related to inflow of foreign direct investment and it is also statistical significant at 5% level which implies that a good performance of the economy is a positive signal for inflow of foreign direct investment. Impact of foreign direct investment and trade on economic. The impact of interest rates on foreign direct investment.
Fdi was found to cause economic growth on australian economy only. Pdf this study explored the impact of foreign portfolio investment on economic growth in nigeria from 1986 to 2017. In contrast to the empirical literatures focus on foreign direct investment fdi, this study examines the effects of foreign portfolio investment fpi and other foreign investment ofi on economic growth using data on 88 countries from 1977 through 2000. The effect of foreign direct investment on economic growth. Foreign portfolio investment and economic growth in nigeria 1986. Growth and the quality of foreign direct investment. Foreign direct investment fdi is argued to play a pivotal role in accelerating economic growth eg of a host country especially in developing and.
The main arguments in this direction is that if these countries gain access to world financial markets and other donor. During the year of 19961997, on average, the economy had grown at annual rate of 8. Foreign portfolio investment and economic growth in malaysia 111 the rest of the paper is organised as follows. Impact of foreign direct investment and trade on economic growth foreign direct investment fdi and trade are often seen as important catalysts for economic growth in the developing countries. In this context, developing countries, and least developed countries in particular. This study tries to ascertain the impact of foreign portfolio investment fpi on economic growth as well as the long run determinants of fpi in nigeria, such that. There have been controversies regarding the effect of foreign direct investment on the growth of the host countrys economy. The results reveal that there exists significant relationship between macroeconomic factors and foreign portfolio investment volatility. Foreign direct investment fdi is generally considered as a key driver of global economic integration. Foreign portfolio investment and economic growth in. This study examined the effect of foreign portfolio investment fpi on economic growth in nigeria. If, however, we find that fdi does not exert a positive. Investigating the impact of foreign capital on economic growth has important policy implications. Foreign portfolio investment and economic growth in nigeria.
Abstract the study examined the relationship between foreign portfolio investment, democracy and economic growth in nigeria. The conclusion was that economic growth may harm openness and foreign direct investment in the three countries investigated. The aim of this paper is to investigate the influence of foreign direct investment fdi on economic growth in southern asia for the period 19772009. Fdi is an important vehicle of technology transfer from developed countries to developing countries. Foreign portfolio investmenteconomic growth nexus in nigeria. Foreign portfolio investment and economic growth in malaysia core. Pdf foreign portfolio investment and economic growth in malaysia.
Moreover, jointly fdi, fmd and gdp growth collectively granger causes fpi, while. Louzi and abadi 2011 used fdiled growth hypothesis in testing the effect of foreign direct investment on economic growth in jordan. Macroeconomic factors and foreign portfolio investment. Foreign direct investment fdi and foreign portfolio investment fpi provide strong economic impetus to a country. Real effects of capital inflows in emerging markets. Foreign portfolio investment and economic growth in malaysia 121 it is an important caveat that the findin gs of this study ar e confined by the empirical restrictions resulting from the nature of. The economic growth imperative of foreign portfolio investment for. Impact of foreign direct investment on domestic investment. Foreign direct investment and economic growth in the short. Foreign portfolio investment and economic growth essay. Determinants of foreign direct investment in nigeria 1980. Organization for economic cooperation and development countries. A first chapter will consider statistical problems related to the questions of definition, sources of data and analysis of the relative importance of the two major investment flows fo r.
We will know about these investments and the differences between them in this article. Foreign direct investment and economic growth in the european. How does foreign direct investment promote economic growth. Thus, less volatility in international portfolio flows is associated with high interest rate, currency depreciation, foreign direct investment, lower inflation, and higher gdp growth rate of the host country. The study therefore analyzed the direction and significance of the effect of foreign portfolio investment in the economic growth in nigeria covering the period 19902005. The impact of foreign capital inflows on economic growth. Foreign portfolio investment fpi consists of securities and other financial assets passively held by foreign investors. This paper traces the effect of greenfield investment disaggregated into six sectors on the one hand and the effect of external debt on the other hand on sectoral growth and employment in egypt over the period 19832014. Thus, this study focuses on the the relationship between foreign portfolio investment to istanbul. We examine the relationship between foreign portfolio investment fpi and. Foreign direct investment and economic growth literature.
The mid 1980s saw the convergence of various factors which encouraged the inflow of fdi into malaysia. This study examines the effects of foreign direct investment fdi and equity foreign portfolio investment efpi on economic growth using data on 80 countries from 1979 through 1998. Foreign portfolio investment, foreign bank lending, and economic growth. Effect of foreign direct investment on economic growth in. This study examines the relationship between foreign portfolio investment. The level of investment of a country is one of the main determinants of economic growth and development. Pdf foreign portfolio investment, foreign bank lending. It is against this backdrop that this study examined the effect of foreign direct investment on economic growth in nigeria. This was with a view to explore the nexus between foreign portfolio investment, democracy and economic growth in nigeria. The economy went on to an extensive diversification and continued economic growth averaging 9% per annum in the period of 19881997.
While some researchers suggest a positive effect, others found a negative effect. Absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth. Although capital flows are one of the most attractive subjects to the researchers, there still are nish areas to be analyzed. Annual timeseries data for the period 1986 to 20 on foreign portfolio investment and maximum lending rate were. Foreign direct investment is in contrast to portfolio investment, which is a passive investment in the securities of another country such as stocks and bonds. Foreign direct investment and economic growth dialnet. Like most other developing countries, the malaysian government welcome fdi rather than portfolio investment simply because the government believed that fdi would play an important role in malaysias economic development. The relationship between foreign portfolio investment. It cannot be denied that fdi has contributed significantly to the. In terms of policy implications, this studys analyses do not support special tax breaks and subsidies to attract foreign capital. Instead, the literature suggests that sound policies encourage economic growth and also provide an attractive environment for foreign investment. The relationship between foreign portfolio investment and foreign direct investment on economic growth study at indonesia stock exchange and bank of indonesia period 20062014 thesis pdf. Secondary data were sourced from the central bank of. If fdi has a positive impact on economic growth after controlling for endogeneity and other growth determinants, then this weakens arguments for restricting foreign investment.
Pdf this study examines the relationship between foreign portfolio investment fpi and malaysias economic performance. A great number of studies on this subject have made useful contributions to. In a small open economy, final goods production is carried out by foreign and domestic firms, which compete for skilled labor, unskilled labor, and intermediate products. Alfaro, laura, areendam chanda, sebnem kalemliozcan, and selin sayek. Foreign direct investment fdi is very low in zimbabwe and this is resulting in low levels of economic growth and standards of living and has hindered efforts to promote economic prosperity and sustainable development for the country. Foreign capital brings credit, knowledge, and discipline to the host countries, which are thought to be essential for economic growth tong and wei, 2011. Foreign portfolio investment and economic growth in nigeria democratic settings ibrahim t. This paper contains an empirical assessment of the growth effects of foreign direct investment fdi in european union eu countries, when controlling for. Impact of foreign direct investment on nigeria economic. This was with a view to explore the nexus between foreign portfolio investment, democracy and. With increase in globalization, fdi and fpi are crucial to improve the economic standards and private sectors of a country.
The study examined the relationship between foreign portfolio investment, democracy and economic growth in nigeria. Foreign portfolio investment, foreign bank lending, and. Foreign direct investment and economic growth etheses. The study utilizes time series data over the period of 19912015. The result showed that in the longrun foreign portfolio investment had positive and significant effect on the economic growth in nigeria t 3. Foreign portfolio investment and economic growth in malaysia.
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