Search Results (986)

This paper aims to assess the relationship between foreign direct investment (FDI) and economic development/employment rate over the period 2013–2023 for Romania, as well as for other European Union country groups (Central and Eastern Europe, Northern and Western Europe and Peripheral Europe). In this respect, we used the Panel FEGLS method adjusted with cross-section SUR and found a positive relationship between FDI and Gross Domestic Product (GDP) per capita for all panels, the strongest estimated relationship being identified for Romania (followed by the one specific to Central and Eastern European states), considering the important role of the level of economic development in shaping these differences. Regarding the relationship between FDI and employment rate, we also found positive coefficients, the highest ones being identified for Central and Eastern Europe and Romania. However, the weakest estimated relationship between FDI and GDP per capita/employment was identified for the Peripheral Europe countries. Full article

Foreign Direct Investment (FDI, hereafter) as a determinant of economic growth has received significant attention in both the theoretical and empirical research literature due to its numerous benefits. However, the FDI–growth relationship is rarely researched for the economy of Saudi Arabia. Amid this backdrop in the literature, this paper focuses on Saudi Arabia to provide fresh, comprehensive evidence about the FDI–growth relationship. Our analysis is based on time series data for the period 1975–2023, which were collected from credible global sources. For estimation, the study adopted ARDL modeling, which is suitable for time series data as it produces both long-run relationships and short-run dynamics simultaneously. Our results show that FDI inflows have a positive and statistically significant influence on economic growth in the long run. Similarly, in the long run, both human capital and trade openness have also improved the long-run growth of Saudi Arabia. Furthermore, a positive and statistically significant influence of natural resources on economic growth is observed in the long run. Moreover, the results show that total factor productivity and domestic investment have not had the desirable influences on economic growth. The short-run results show that the growth performance of Saudi Arabia could be explained by natural resources, domestic investment and human capital. The causality analysis also confirmed a one-way relationship running from FDI inflows towards economic growth. Our results have a significant policy implication for the policymakers of Saudi Arabia. Full article

This study investigates the relationship between economic growth, health expenditure, institutional quality, gross fixed capital formation, and foreign direct investment in EU countries outside the euro area over the period 2000–2024. The analysis is grounded in neoclassical and endogenous growth theory, with particular emphasis on the role of institutional quality as a conditioning factor in the growth process. Methodologically, this study employs an integrated empirical time-series framework focusing on selected health, institutional and investment-related determinants of growth, including linear and nonlinear unit root tests, structural break analysis, and an Autoregressive Distributed Lag/Error Correction Model (ARDL/ECM) approach to capture both long-run equilibrium relationships and short-run dynamics. ECM-based Granger causality tests are further applied to examine the direction of causal interactions. The results confirm the existence of a long-run cointegration relationship across all countries, although the magnitude and direction of the effects vary considerably. Gross fixed capital formation exerts a robust positive influence on economic growth, while foreign direct investment mainly affects growth in the short run and is highly sensitive to external shocks. Health expenditure contributes to growth through human capital formation, with predominantly lagged effects. Institutional quality is associated with growth dynamics, although the direction and strength of this relationship vary across countries and should be interpreted in light of feedback effects identified in the causality analysis. Overall, the findings highlight significant cross-country heterogeneity and underscore the importance of institutional quality in enhancing the effectiveness of investment and public spending for sustainable economic growth. Full article

This study empirically analyses the influence of energy consumption, economic growth, and foreign direct investment (FDI) on carbon emission in India. The Autoregressive Distributed Lag (ARDL) bounds-testing approach is applied on time series data from 1990 to 2022 to determine the cointegration between series variables. The findings show that all variables are cointegrated. The Granger Causality test confirms unidirectional causality running from economic growth to carbon emissions, from carbon emissions to energy consumption, from energy consumption to foreign direct investment, and from foreign direct investment to renewable energy consumption. Also, the results presented a bidirectional causal relationship between foreign direct investment and carbon emission. Thus, the level of carbon emissions is significantly connected with economic growth and energy consumption. The rising energy demand further supports investment in the energy sector. Based on our findings, this study suggests the creation of policies towards mitigation of environmental pollution and promotion of investment in clean energy sources. Full article

This study investigates the long-run and short-run relationships between capital market development, foreign direct investment, trade openness, and real GDP per capita in Romania over 2003–2024, employing the Autoregressive Distributed Lag (ARDL) bound testing approach, complemented by lag-augmented VAR Granger-causality analysis and a comprehensive set of diagnostic and stability tests. The bounds tests strongly reject the null of no cointegration, confirming a long-run relationship that remains robust under finite-sample critical values. The causality analysis demonstrates a supply-leading mechanism from the equity market to real economic activity, while economic growth in turn Granger-causes both market liquidity and trade openness, pointing to demand-following dynamics for these channels. The analysis shows that foreign direct investment, market liquidity, and trade openness exert positive and significant short-run effects; yet their long-run coefficients are negative, significantly for FDI (foreign direct investments), capturing an asymmetry between immediate output gains and durable structural contribution that is characteristic of emerging European economies. The error-correction term is positive, demonstrating that real GDP (gross domestic product) per capita does not adjust back toward the long-run relationship in the conventional sense, but, instead, it behaves as a forcing variable that leads the financial and trade channels rather than being led by them. All in all, the findings describe an economy with functional short-run transmission channels, but limited long-run structural anchoring, with direct relevance for Sustainable Development Goals 8 and 17 and Romania’s ongoing OECD accession. Full article

This study examines the relationship between financial inclusion and economic development in the European Union by analyzing its macroeconomic determinants across 26 countries over the period of 2004–2023. Using a balanced panel dataset, the empirical analysis employs econometric techniques that account for heterogeneity, autocorrelation, and cross-sectional dependence, leading to the estimation of a Panel-Corrected Standard Errors (PCSE) model. Financial inclusion is proxied by the number of automated teller machines per 100,000 adults, while the explanatory variables include GDP per capita, personal remittances, inflation, years of schooling, unemployment, and foreign direct investment. The results show that GDP per capita, remittances, inflation, and unemployment have a positive and statistically significant effect on financial inclusion, whereas education and foreign direct investment exhibit a negative and significant relationship. These findings suggest that financial inclusion in the European Union is shaped by a complex interplay of economic development, labor market conditions, and external financial flows, rather than by structural factors alone. Notably, the results reveal counterintuitive relationships that challenge conventional assumptions about the roles of education and foreign investment in promoting financial access. This study contributes to the literature by providing updated panel evidence for advanced economies and by emphasizing the multidimensional nature of financial inclusion in a context of increasing digitalization and economic integration. The findings also offer relevant policy implications, suggesting that strategies to enhance financial inclusion should go beyond expanding financial infrastructure and instead focus on improving the effective use of financial services, strengthening financial capabilities, and reducing structural disparities across countries. Full article

This paper investigates the role of cross-border trade in shaping participation in global value chains (GVCs) in developing and emerging economies over the period 2000–2022. It tests the central hypothesis that greater trade intensity enhances integration into fragmented global production systems. Using panel data methods, the analysis examines the effects of trade openness alongside foreign direct investment, logistics performance, GDP per capita, and domestic value added. The results provide strong evidence that trade openness is the dominant driver of GVC participation, with a robust and economically meaningful elasticity. Domestic value added is also positively associated with GVC integration, suggesting that deeper global engagement can coincide with increased domestic value creation. GDP per capita exerts a weaker but significant effect, while foreign direct investment and logistics performance do not show direct statistical significance in the preferred specification. These findings highlight trade as the primary transmission mechanism linking national economies to global production networks, while also pointing to a complementary role of domestic capabilities. At the same time, increased reliance on cross-border trade may heighten exposure to external shocks, underscoring a key policy trade-off. The study concludes that effective GVC integration requires balancing openness with strategies that strengthen resilience and value capture. Full article

This review examines the relationship among foreign direct investment (FDI), trade openness, and economic growth, with emphasis on the channels through which external integration influences development outcomes. The literature generally suggests that FDI can raise growth through capital accumulation, technology transfer, productivity gains, and stronger linkages with domestic firms, while trade openness can promote growth by expanding market access, increasing competition, and improving resource allocation. However, the evidence is not uniform: some studies report that trade openness is the main driver of growth, while others find that FDI has a stronger effect, or that both variables matter only under favorable macroeconomic, institutional, and financial conditions. This review synthesizes theoretical arguments and empirical findings, identifies major transmission mechanisms and conditional factors, and highlights the policy environment needed for FDI and trade liberalization to translate into sustained economic growth. Full article

Background and Motivation: Foreign direct investment (FDI) has been widely examined as a potential driver of economic growth, yet empirical evidence for Morocco remains inconclusive due to methodological limitations and endogeneity concerns. This study re-examines the FDI–growth relationship in Morocco over the period 1977–2022 using a five-equation simultaneous system estimated by Two-Stage Least Squares (2SLS). The framework jointly models GDP growth, FDI, exports, human capital, and domestic investment in order to account for bidirectional relationships among the main variables. Methods: Unit root and Johansen cointegration tests support the existence of long-run equilibrium relationships among the series, while a Chow test identifies a significant structural break in 2003 (F = 11.43, p = 0.003). Diagnostic tests confirm instrument relevance (Cragg–Donald F > 10) and fail to reject over-identification validity (Hansen J p > 0.10). Results: The results indicate a positive but statistically fragile association between FDI and economic growth—positive in sign across all specifications but sensitive to sample size and instrument choice (β = 2.179, t = 1.728, p = 0.092; 90% CI: [−0.341, 4.699] in constant 2015 USD billions). FDI is associated with growth primarily through indirect channels—particularly export expansion and human capital accumulation—rather than through direct capital deepening alone, consistent with an absorptive-capacity interpretation. The estimated structural break in 2003 reflects a broader package of concurrent institutional and macroeconomic reforms; the model cannot isolate the independent contribution of FDI within this composite effect. The results should therefore be interpreted as evidence of long-run reduced-form associations rather than definitive causal effects. Conclusions: Overall, the study contributes to the Morocco-specific literature by integrating simultaneous equations, indirect transmission channels, and structural break analysis within a unified long-run framework. Full article

This paper examines changes in the macroeconomic indicators of the member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) following their accession to the agreement. This study aims to identify shifts in the structural comparability of national economies and to assess the processes of macroeconomic convergence in the context of sustainable development. To achieve this objective, reference pools of CPTPP member countries are constructed, and their digital profiles are developed based on key macroeconomic indicators and grouped into three blocks: (1) indicators of economic growth and the state of the real sector, including GDP (constant 2015 US$), GDP growth, annual %, gross capital formation, % of GDP, unemployment, total % of total labor force, and national estimate; (2) indicators of foreign economic activity and trade openness, including exports of goods and services, % of GDP, imports of goods and services, % of GDP, external balance on goods and services (% of GDP), foreign direct investment, net inflows, % of GDP, and trade, and % of GDP; (3) indicators of financial and macroeconomic stability including inflation, consumer prices, annual %, central government debt, % of GDP, and gross savings, and % of GDP. Based on the digital profiles, similarities/differences in the economies were examined by applying linear discriminant analysis (LDA). The empirical framework covers two periods: (1) 2013–2017 (pre-accession) years and (2) 2019–2023 (post-accession) years. The results indicate that the economies of member countries in 2013–2017 exhibited a high degree of heterogeneity. In contrast, the 2019–2023 period demonstrates a tendency toward partial convergence of macroeconomic parameters, as evidenced by a reduction in distances between country profiles in the discriminant space. While interpreting the results, it is acknowledged that the 2019–2023 period coincided with the effects of the global crisis caused by the COVID-19 pandemic, which significantly impacted international trade dynamics. For most countries, this period was characterized by a decline in several macroeconomic indicators and investment activity, an increase in debt burdens, and enhanced heterogeneity in economic dynamics, which was taken into account when interpreting macroeconomic convergence processes within the CPTPP. The scientific novelty of the study lies in its application of an approach based on the analysis of the structural similarity of the macroeconomic profiles of CPTPP countries, which complements traditional assessments of the effects of economic and trade integration. The practical significance of the findings is associated with their potential use in evaluating the prospects for CPTPP expansion and in modeling alternative scenarios of participation and sustainable development within international trade agreements under conditions of global economic transformation. Full article

This study examines the long-run and distributional determinants of CO₂ emissions in Saudi Arabia (1970–2021) by integrating economic growth, energy consumption, foreign direct investment (FDI), natural resource rents, and urbanisation within a unified framework. Johansen cointegration, Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), Canonical Cointegrating Regression (CCR), and a Vector Error Correction Model (VECM) establish long-run relationships and causality; quantile regression identifies distributional heterogeneity. The principal novel finding is a countercyclical, regime-dependent mitigation role for natural resource rents: rents exert no significant effect at low-emission quantiles but generate negative effects from the median quantile onward (−0.04 to −0.06), precisely when emissions and oil revenues are simultaneously elevated. This distributional asymmetry, invisible to mean-based estimators, implies that hydrocarbon revenues provide a high-regime fiscal buffer for environmental investment. Aggregate FDI is environmentally neutral across all specifications, indicating the technique effect operates through fiscal channels rather than investment channels. Energy consumption drives emissions with near-unity elasticity, confirming carbon lock-in, and economic growth shows no decoupling. These findings provide quantitative foundations for fiscal rules linking oil revenue windfalls to green investment under Vision 2030. Full article

This study examines the digital economy and high-quality economic development across 285 prefecture-level and higher cities in China from 2012 to 2022, with the objective of exploring both the overall and mediating effects of the digital economy on urban economic development. The findings are intended to inform policy recommendations aimed at supporting the promotion of the digital economy and the advancement of high-quality urban development in China. The primary conclusions derived from the analysis are as follows. (1) The digital economy exerts a significant positive effect on the high-quality development of urban economies, whereas the level of urbanization exerts a negative influence. Factors such as fiscal decentralization, the quality of the ecological environment, financial development, and foreign direct investment are found to positively contribute to high-quality development, and these findings are validated through robustness tests. (2) Technological innovation is identified as a mediating variable in the relationship between the digital economy and urban high-quality development, suggesting that the benefits of the digital economy are predominantly realized through technological innovation. The empirical results are also demonstrated to be robust across multiple analytical approaches. Full article

The paper seeks to determine whether renewable energy is a future pathway for society or rather a temporary stage leading towards sustainable sources of energy. It evaluates the factors that affect the use of renewable energy in Malaysia through modelling their long-term relationship and short-term causalities. Time-series data collected from 1970 to 2021 is used in the Johansen cointegration test and Vector Error Correction Model (VECM) to determine the association among renewable energy consumption, per capita GDP, foreign direct investments (FDI), carbon dioxide (CO₂) emissions, oil prices, trade openness, and urbanisation. There is evidence of a strong positive long-term association between renewable energy consumption and per capita GDP. However, there is evidence of a negative long-term relationship between renewable energy and FDI, CO₂ emissions, oil prices, and urbanisation. There is a positive relationship between renewable energy consumption and trade openness in the long term. In addition, short-term causality analysis shows the existence of a feedback loop between renewable energy consumption, economic growth, and FDI. Overall, the paper provides empirical evidence for the carbon-neutral target set by Malaysia in 2050. Full article

Foreign direct investment (FDI) is widely promoted as a driver of economic output through mechanisms such as technology transfer, capital accumulation, and productivity spillovers. However, the empirical literature shows highly inconsistent results known as the “FDI-output puzzle.” We argue that these inconsistencies arise because the output-level effects of FDI are non-linear and depend crucially on the host country’s absorptive capacity. By analyzing a global panel of 172 sovereign nations from 2000 to 2022, we demonstrate that FDI’s output impact depends on a country’s financial development and institutional quality. Our baseline fixed effects models yield a positive and significant within-country FDI-output elasticity of 0.019–0.047. Furthermore, interaction models reveal that deeper financial markets and stronger legal institutions amplify FDI’s effect on real GDP levels. Two-stage least squares estimation confirms these relationships are not due to reverse causality. Following I employ a levels specification—regressing the natural logarithm of real GDP on the natural logarithm of FDI—that directly estimates output-level elasticities, capturing the steady-state relationship between FDI and the level of economic output. This dual-specification design is complemented by dynamic panel GMM estimation, which confirms the positive FDI–output relationship in a dynamic setting. Our findings show that attracting FDI alone is insufficient for expanding output; countries must also develop robust financial infrastructure and effective governance to fully benefit from foreign capital. Full article

This study investigates how sustainable development indicators are shaped in the context of Kazakhstan. The focus is on the interrelationships between economic growth, dependence on the mining sector, and foreign direct investment. In addition, the analysis pays special attention to the impact of the principles of the “green” taxonomy and changes in the ESG direction on these processes. Using annual time-series data, the analysis employs the augmented Dickey–Fuller unit root test, Johansen cointegration methods, and long-run estimation methods, namely, fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS). The analysis showed that there is a long-term relationship between GDP, the level of mineral extraction, foreign direct investment and the SDG index. According to the results, economic growth and foreign investment contribute to improving sustainable development indicators, and this effect is statistically confirmed. Conversely, a significant share of the mining sector appears to be linked to an increase in the environmental burden associated with resource dependence, which has a negative impact in the long term. The absence of significant short-term causal relationships suggests that sustainable development indicators evolve through gradual structural and institutional changes rather than short-term fluctuations. These findings suggest that the sustainability of economic growth is influenced by its structural composition, with investment-led diversification and modernization enhancing playing a crucial role in achieving sustainable development goals, while the expansion of the mining sector may hinder this. The study highlights the need and importance of aligning economic policies with the principles of the “green taxonomy”, improving institutional frameworks, and promoting environmentally sustainable investments to support long-term sustainable development trajectories. Full article