Foreign direct investment and transition economies: empirical evidence from a panel data estimator

This paper identifies the factors that determine FDI inflows in the former socialist countries of Eastern and Central Europe. In our analysis, FDI inflows are modeled as a function of the market size (i.e., real GDP), inflation, the current account balance, the real exchange rate, openness and government regulation for the host country. Using data from 1995 to 2004, a panel data estimator suggests that the real exchange rate, openness of the economy and deregulation are the primary factors determining FDI inflows in these countries.

Foreign Aid, FDI and Economic Growth in East European Countries

This paper examines the effectiveness of foreign aid and foreign direct investment in the Czech Republic, Estonia, Hungary, Latvia, Lithuania and Poland. The model includes the labor force, capital stock, foreign aid and foreign direct investment, and is estimated using pooled annual time series data from 1993 to 2002. Before carrying out the estimation, the time series properties of the data are diagnosed and an error-correction model is developed and estimated using a fixed-effects estimator. The results indicate that an increase in the stock of domestic capital and inflow of foreign direct investment are significant factors that positively affect economic growth in these countries. Foreign aid did not seem to have any significant effect on real GDP.

Nepal and Bhutan: development strategies and growth

This paper has sought to examine the factors that have contributed to the economic growth of Nepal and Bhutan. After a brief discussion of the economy and growth strategy of each country, standard growth models for Nepal and Bhutan are developed and estimated. The results indicate that domestic capital has been a significant source of economic growth in Nepal whereas foreign aid has not had any appreciable effect on growth. The reverse is true for Bhutan

Foreign Aid, FDI and Economic Growth in East European Countries

This paper examines the effectiveness of foreign aid and foreign direct investment in the Czech Republic, Estonia, Hungary, Latvia, Lithuania and Poland. The model includes the labor force, capital stock, foreign aid and foreign direct investment, and is estimated using pooled annual time series data from 1993 to 2002. Before carrying out the estimation, the time series properties of the data are diagnosed and an error-correction model is developed and estimated using a fixed-effects estimator. The results indicate that an increase in the stock of domestic capital and inflow of foreign direct investment are significant factors that positively affect economic growth in these countries. Foreign aid did not seem to have any significant effect on real GDP

Exchange Rate Volatility And Foreign Direct Investment: Evidence From East Asian Countries

This paper uses panel data to examine the effect of exchange rate uncertainty on foreign direct investment in China, Indonesia, Malaysia, the Philippines, South Korea, and Thailand – countries that have continued to attract considerable foreign direct investment (FDI) inflows while also experiencing a great deal of volatility in exchange rates.  After establishing the stationarity of the data series, a panel cointegration test was conducted, following which an error correction model was developed and estimated using two sets of panel data.  The overall estimation results are consistent with theoretical predictions.  We find that exchange rate volatility has a favorable effect on foreign direct investment in our sample countries

Devaluation and the trade balance: estimating the long run effect

This study tests the effectiveness of devaluation on the trade balance in eight developing countries from Asia, Europe, Africa and Latin America. A unique and new methodology is used to estimate the long run effect of devaluation on the trade balance. The estimated results suggest that devaluation, in general, does not improve the trade balance in the long run. In some cases it even had a perverse effect.

Another Empirical Look at the Theory of Overlapping Demands - Un Altro Sguardo Empirico alla Teoria delle Overlapping Demands

Linder’s theory of overlapping demands suggests that international trade in manufactured goods will be stronger between countries with similar per capita income levels. In this paper, we test the Linder hypothesis for five East Asian countries using panel data for five years. In addition to including bilateral trade data for these countries, we include their bilateral trade data with their other major trading partners. A modified gravity model is developed for this purpose. The model is first estimated for each year in the sample. In addition, a panel data set is constructed and estimated using a fixed-effects estimator. The overall results of our estimations are quite robust and do not provide support for Linder’s hypothesis

Remittances, FDI, and Economic Growth in South Asia: Evidence from Panel Data - Rimesse di Denaro, Investimenti Diretti Esteri e Crescita Economica in Sud Asia: Evidenze da Dati Panel

This paper estimates the effect of FDI and remittances on economic growth in South Asia using an aggregate production function model. Time series data from 1976 to 2010 for India, Pakistan, Bangladesh and Sri Lanka is used to create the panel data. Time series properties of the panel data are diagnosed using panel unit root and panel cointegration tests and an error correction model is developed. The model is estimated using fixed effects estimator. The findings suggest that FDI has a positive effect on economic growth but remittances have a negative effect. A decrease in exports due to the Dutch Disease, a decrease in the labor force participation of the remittance receiving family, and public moral hazard problems could be possible reasons for the negative effect of remittances on economic growth