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Economies
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FDI (Foreign Direct Investment) and Economic Growth
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FDI (Foreign Direct Investment) and Economic Growth

A special issue of Economies (ISSN 2227-7099).

Deadline for manuscript submissions: closed (15 September 2020) | Viewed by 64532

Special Issue Editor

Prof. Dr. Gheorghe H. Popescu

E-Mail Website
Guest Editor
1. Dimitrie Cantemir Christian University, Splaiul Unirii 176, Bucharest, Romania
2. Center for Applied Macroeconomic Analysis at the American Association for Economic Research, 30-18 50th Street, Woodside, New York, NY 11377, USA
Interests: macroeconomics; labor economics and policies; economic governance; sustainable development
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

This Special Issue will consider original empirical research and review articles focusing on whether foreign direct investment (FDI), an essential element of nearly all states’ lasting development strategies, really results in economic growth. Developed countries have the absorptive capacity to benefit from FDI whose growth-enhancing effects are determined by the host environment. Appropriate absorptive capacity indicators for positive growth may be trade openness, financial development, and education. FDI is typified by durable investments in which overseas owners supervise assets abroad. Governments and regional administrations compete for FDI via tax incentives and subsidies, as zonal variation and current FDI may matter for growth through input accumulation, having a positive indirect effect on productivity. FDI spillovers from local sourcing are determined by the amount of connections established between foreign investors and domestic providers, in addition to the supply of knowledge through various kinds of assistance. Technological supply factors, instrumental in the location of FDI, bring about positive spillovers by improving innovation and boosting competition. Technological advancements are diffused worldwide through FDI, somewhat removing dissimilarities between home and host economies in recipient sectors. Multilateral trade policy liberalization may stimulate outward FDI. Particular institutions attract FDI by diminishing investors’ vulnerability to political risk.

Prof. Gheorghe H. Popescu
Guest Editor

Manuscript Submission Information

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Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Economies is an international peer-reviewed open access monthly journal published by MDPI.

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Keywords

  • FDI
  • economic growth
  • trade openness
  • financial development
  • positive spillovers
  • durable investment

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Published Papers (4 papers)

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Research

15 pages, 1012 KiB  
Article
The Impact of Foreign Direct Investment on Income Inequality in Vietnam
by Quoc Hoi Le, Quynh Anh Do, Hong Chuong Pham and Thanh Duong Nguyen
Economies 2021, 9(1), 27; https://doi.org/10.3390/economies9010027 - 1 Mar 2021
Cited by 27 | Viewed by 15650
Abstract
Foreign direct investments (FDI) is an important determinant of economic growth. FDI does not only contribute to the growth and economic development but also affects income through contributing to economic development and the impact on employment and salary structure of developing countries. The [...] Read more.
Foreign direct investments (FDI) is an important determinant of economic growth. FDI does not only contribute to the growth and economic development but also affects income through contributing to economic development and the impact on employment and salary structure of developing countries. The aim of this paper is to analyze the impact of FDI on income inequality in Vietnam. This study is the first attempt to examine the impact of FDI on income inequality under the constraints of the institution and education levels. To address the potential endogeneity problem, this study adopts Genernalized Method of Moment (GMM) model to conduct the estimation. A two-step GMM model with robust standard errors is used in the study. Empirical results show that FDI tends to increase income inequality in Vietnam and the existence of a non-linearity relationship between FDI and income inequality is also validated. Moreover, the study finds that the effects of FDI on income inequality are different depending on the level of education and institutions of the host provinces in Vietnam. The results of this study imply that, in order to ensure sustainable development, Vietnam’s policies should focus on improving the quality of economic governance and the administrative reform efforts of the government of the provinces and cities. Besides, policies should focus on increasing investment in public education and improving human capital, which not only can reduce income inequality but also can attract more FDI inflows. Full article
(This article belongs to the Special Issue FDI (Foreign Direct Investment) and Economic Growth)
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19 pages, 734 KiB  
Article
Does Foreign Direct Investment and Trade Promote Economic Growth? Evidence from Albania
by Sam Hobbs, Dimitrios Paparas and Mostafa E. AboElsoud
Economies 2021, 9(1), 1; https://doi.org/10.3390/economies9010001 - 1 Jan 2021
Cited by 31 | Viewed by 7138
Abstract
Albania has experienced a rapid transition from a centrally planned economy to a mixed economy since the fall of communism in 1989. Policy changes, trade liberalization, and privatization have come about at a rapid pace, allowing foreign direct investment (FDI) and international trade [...] Read more.
Albania has experienced a rapid transition from a centrally planned economy to a mixed economy since the fall of communism in 1989. Policy changes, trade liberalization, and privatization have come about at a rapid pace, allowing foreign direct investment (FDI) and international trade to become key components of Albania’s economy. Against this backdrop, this study investigates the relationships among FDI, trade, and economic growth in Albania. Annual time-series data were obtained from the World Bank. Then, the following econometric tests were performed on the variables representing FDI inflows, exports, and GDP as proxies for FDI, trade, and economic growth: the unit root test; the unit root test with a structural break; Johansen cointegration analysis; the error correction model; and the Granger causality test. The results revealed a long-term relationship between FDI, trade, and economic growth. The Granger causality tests found unidirectional causality. Economic growth brought about exports and FDI in the short term but not vice versa. In conclusion, policymakers need to design policies that promote technology-based, export-promoting FDI to meet the needs of the economy and develop specialized sectors that are competitive in the global market. Furthermore, the salient takeaway is that the penetration of export markets should be promoted as much as the furtherance of FDI. Full article
(This article belongs to the Special Issue FDI (Foreign Direct Investment) and Economic Growth)
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20 pages, 909 KiB  
Article
The Impacts of Chinese FDI and China–Africa Trade on Economic Growth of African Countries: The Role of Institutional Quality
by Miao Miao, Qiaoqi Lang, Dinkneh Gebre Borojo, Jiang Yushi and Xiaoyun Zhang
Economies 2020, 8(3), 53; https://doi.org/10.3390/economies8030053 - 29 Jun 2020
Cited by 28 | Viewed by 22181
Abstract
While there is a consensus on the expanding importance of the China–Africa economic relationship, there is much more debate on how to portray the relationship. Thus, this study is aimed to examine the impacts of the China–Africa trade and Chinese foreign direct investment [...] Read more.
While there is a consensus on the expanding importance of the China–Africa economic relationship, there is much more debate on how to portray the relationship. Thus, this study is aimed to examine the impacts of the China–Africa trade and Chinese foreign direct investment (FDI) on the growth of African countries controlling the mediating role of institutional quality. The two-step system Generalized method of moments (GMM) model is applied using robust data for the period of 2003–2017. Drawing on complementary theoretical perspectives, this study took into account the conditional effect of China–Africa trade and Chinese FDI subject to the institutional quality of African countries and the interdependence of China–Africa trade and Chinese FDI to African countries. The benign impacts of the China–Africa trade and Chinese FDI on economic growth to African countries remain contingent upon appropriate policy action to improve the institutional quality of African countries and the synergies between the China–Africa trade and Chinese FDI to African countries. Full article
(This article belongs to the Special Issue FDI (Foreign Direct Investment) and Economic Growth)
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12 pages, 259 KiB  
Article
Causality Effects among Gross Capital Formation, Unemployment and Economic Growth in South Africa
by Michael Takudzwa Pasara and Rufaro Garidzirai
Economies 2020, 8(2), 26; https://doi.org/10.3390/economies8020026 - 3 Apr 2020
Cited by 45 | Viewed by 16632
Abstract
Stagnant economic growth, decreasing investment and high unemployment remain consistent macroeconomic challenges for South Africa. Gross Capital formation (GCF) is designed to improve employment and economic growth (GDP). This study investigates the causality effects of the three variables using time series data from [...] Read more.
Stagnant economic growth, decreasing investment and high unemployment remain consistent macroeconomic challenges for South Africa. Gross Capital formation (GCF) is designed to improve employment and economic growth (GDP). This study investigates the causality effects of the three variables using time series data from 1980 to 2018 in a Vector Autoregressive (VAR) framework. Results of the first model reveal a positive long-term relationship between gross capital formation GCF and economic growth GDP. Contrariwise, the first model indicates that unemployment (UNEMP) does not influence economic growth (GDP) in the short run. The second model results reveal a significant and positive relationship between UNEMP and GCF, while the third model shows an inverse relationship between GDP and UNEMP. Based on these findings, the study therefore recommends that fiscal authorities introduce expansionary fiscal policy that stimulates economic growth, investment and employment. Full article
(This article belongs to the Special Issue FDI (Foreign Direct Investment) and Economic Growth)
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