Determinants of Foreign Direct Investment in SAARC Countries: An Investigation Using Panel VAR Model

Foreign direct investment (FDI) is considered to be a policy variable to enhance economic growth in the economy. So identifying the determinants of FDI is very challenging among the policymakers. The paper examines the determinants of foreign direct investment in seven SAARC countries over the period 1980-2010. Using panel VAR model, the paper finds that foreign direct investment are largely influenced by economic growth, exchange rate, inflation, labor population, trade balance, current account balance and long term debt outstanding. The impact of economic growth and exchange rate are bidirectional, while the other factors are unidirectional on FDI inflows

Infrastructure in India: The Present Status and Its Constraints

Provision of adequate infrastructure, in terms of both quantity and quality, is very essential for the rapid achievement of sustainable economic growth, both by increasing productivity and by providing amenities that enhance the quality of life. The objective of this paper is to investigate the role played by infrastructure, grouped under physical, social and financial, in determining economic development in India over the different time periods. An attempt is also made to find out the existence of intra-regional disparities, in terms of infrastructure, among the states of India. Using Factor analysis and regression analysis, the paper finds that infrastructure plays a significant role in determining the inter-state level of development in India during the past quarter century. The paper at the end discusses various challenges and opportunities for the infrastructure development in India and its link with sustainable economic growth

An econometric approach between human development and poverty in North Eastern Region of India

An understanding the linkage between human development and poverty in general and economic development in particular is very imperative in emerging economies in the globe. The objective of this paper is to study the regional variation and causality between human development and poverty in the north-east India. The major finding of this paper is that there exists significant regional variation between human development and poverty in the north eastern states of India. While human development is substantially high in Mizoram and Manipur, it is low in other states. On the contrary, poverty is very low in Mizoram and Manipur, while it is considerably high in other states. The estimated results confirmed that human development (and its individual indicators) has a significant role to alleviate poverty in the north east India

Good governance and human development: Evidence form Indian States

The paper explores the impact of good governance on human development in India during the last two decades. Using panel data analysis, it finds the evidence that good governance and past human development determines present human development in India. That means good governance can be considered as the policy variables through which we can obtain high economic growth and human development in the country. The paper accordingly suggests that with better institutional mechanism and good governance the country can put its development process in the higher ladder of growth and human development. The lack of same may affect the development process, particularly to achieve sustainable economic growth and human development. Hence governments should have aim to increase the status of good governance and can maintain the same with greater caution. This is not a daunting task, if there is adequate political will in the economy

Causality between the pillars of development and economic growth : a panel VAR application

This paper examines the long-term relationship between financial development, social development and economic growth in 15 Asian countries for the period from 1961 to 2012. Using principal component analysis to construct development indices and a panel vector auto-regressive (VAR) model to test Granger causalities, the study identified the presence of bidirectional causality between economic growth and financial development. They predict a country's level of social development. The policy implication of this study is that, in order to maintain sustainable social development in the 15 selected Asian countries, economic policies should recognise differences in the financial development and economic growth of a given country.http://www.inderscience.com/jhome.php?jcode=IJSEMhj201

The impact of stock market development and inflation on economic growth in India : evidence using the ARDL bounds testing and VECM approaches

This paper investigates the impact of stock market development, money supply and inflation on economic growth in India during the post-globalisation era of the 1990s, especially during the period from 1994 to 2012. Using autoregressive distributive lag (ARDL) bounds testing approach, the study finds stock market development, money supply, inflation and economic growth are cointegrated, suggesting the presence of a long-run equilibrium relationship between them. The vector autoregressive error correction model (VECM) further confirms the existence of both bidirectional and unidirectional causality between economic growth, money supply, inflation and stock market development in India. The policy implication of this study is that inflation and money supply can be considered a policy variable to predict both economic growth and stock market development in the Indian economy during the post globalisation era.http://www.inderscience.com/jhome.php?jcode=IJEBRhj201

Innovation, financial development and economic growth in Eurozone countries

Using a panel vector auto-regressive model, we study interactions between innovation, financial development and economic growth in 18 Eurozone countries between 1961 and 2013. We focus on whether causality runs between these variables both ways, one way, the other way or not at all. Our empirical results show that development of the financial sector and enhanced innovative capacity in the Eurozone contribute to longterm economic growth in the countries in the region.http://www.tandfonline.com/loi/rael202018-05-31hb2016Financial Managemen

Causal nexus between economic growth, banking sector development, stock market development, and other macroeconomic variables : the case of ASEAN countries

This paper examines the relationship between banking sector development, stock market development, economic growth, and four other macroeconomic variables in ASEAN countries for the period 1961–2012. Using principal component analysis for the construction of the development indices and a panel vector auto-regressive model for testing the Granger causalities, this study finds the presence of both unidirectional and bidirectional causality links between these variables. The study contributes to understanding the importance of the interrelationship between the variables and combines the different strands of the literature. It also contributes to the literature by focusing on a group of countries that have not been studied before. One particular policy recommendation is to make the banking sector more accessible for those country's inhabitants that do not have bank accounts. Another policy recommendation is to nurture stock market development, which will facilitate the increased raising of capital for investment purposes to enhance economic growth.http:// www.elsevier.com/locate/rfehb2016Financial Managemen

The dynamics of banking sector and stock market maturity and the performance of Asian economies : time series evidence

PURPOSE – The purpose of this paper is to examine the nature of causal relations between banking sector maturity, stock market maturity, and four aspects of performance and operation of the economy: economic growth, inflation, openness in trade, and the degree of government involvement in the economy. DESIGN/METHODOLOGY/APPROACH – The authors look for possible links between the variables by conducting panel cointegration and causality tests, using a large sample of Asian countries over the period 1960-2011. Novel panel data estimation methods allow for robust estimates, using both variation between countries and variation over time. FINDINGS – The study identifies interesting causal links among the variables deriving uniquely from our innovations. In particular, The paper finds that for all regions considered, banking sector maturity and stock market maturity are causally linked, sometimes in both directions. Furthermore, stock market maturity may lead to economic growth, both directly and indirectly through indicators such as inflation and trade openness. The findings also support the notion that economic growth affects the maturity of the stock market in most regions. PRACTICAL IMPLICATIONS – The results lend support to the notion that a mature financial sector is a key contributor to generating economic growth. Furthermore, economic growth itself has the potential to bring about maturity in the financial sector. ORIGINALITY/VALUE – The paper uses sophisticated principal-component analysis, panel cointegration, and Granger causality tests, methods not used in this literature before. The method was applied to recent data pertaining to 35 Asian countries – a group of countries that has previously not been adopted in this literature.http://www.emeraldinsight.com/1026-4116.htmhttp://www.emeraldinsight.com/loi/jeashj201

Risk ratings and stock prices : the causal nexus in BRICS countries

This paper investigates the nature of causal relations between risk (economic risk, financial risk and political risk) and stock prices in five BRICS countries (Brazil, Russia, India, China and South Africa), applying the Granger causality test over a period of 20 years from 1992 to 2012. The study bridges a gap in the literature, as prior macroeconomic empirical investigation has been limited to a possible link between risk ratings and stock prices. Our modelling includes BRICS stock price indices and three risk ratings, namely economic risk ratings, financial risk ratings, and political risk ratings. To achieve our objective, two econometric methodologies were adopted: cross-country regressions and time series regressions. The empirical results of this study indicate that for Russia and China (and the BRICS counties as a group), there is a unidirectional causality between political risk and economic risk. Another noteworthy result was the fact that a unidirectional causality between economic risk and share prices were found for India and China (and the BRICS countries as a group), but not for the other countries under review. This indicates the important role that the stock market plays in the economies of India and China and hence provides an extra caution for prospective investors in these countries.http://www.inderscience.com/jhome.php?jcode=IJBAAFhj201