Panel Cointegration and Granger Causality Approach to Foreign Direct Investment and Economic Growth in South Asian Countries

The aim of this study is to examine the long run equilibrium relationship between FDI, growth rate and economic growth in the developing countries of South Asia. Data was collected from the United Nations Conference on Trade and Development and World Bank Development Indicator from 1990 to 2017. However, Johansen Fisher Panel Cointegration and Pairwise Dumitrescu Hurlin Panel Causality Tests were utilized to address the objective of this paper. Consequently, it was discovered that a long run equilibrium relationship exists between FDI, growth rate of economy and economic growth in the developing countries of South Asia within the period under consideration. Moreover, there is an existence of unidirectional causality running from both growth rate and economic growth to FDI inflows in these countries. This implies that whenever the target of the policy makers in these economies is to facilitate the sporadic inflows of foreign capital, expanding the market size and manipulating the rate of economic growth would induce an increase in FDI inflows in the long run. Finally, the important findings that emerged in this work made this paper to recommend the following vital policy for the policy makers, investors, financial institutions regulators and future researchers. Therefore, the policy makers in the developing countries of South Asia should come up with the strategic policy measure that will expand the market size and ensure a sustainable growth rate in this sub regio

Foreign Direct Investment Inflows and Oil Exports in Nigeria: Cointegration and Vector Error Correction Model Approach

The aim of this paper is to examine the long run relationship between FDI inflows and oil exports in Nigeria. Past empirical studies have failed to examine the long run relationship between FDI and oil sector of the economy in the recent time, which has created a gap in the literature Data was collected from CBN Statistical Bulletin and UNCTAD investment report from 1990 to 2016, and various diagnostic tests such as Unit Roots and Johansen conitegration were estimated. Consequently, Vector Error Correction model was employed to address the objective of this study. It was established from this study that a long-run relationship between FDI inflows, oil exports, exchange rate and inflation existed in Nigeria, while the error correction term submits that about 38% error made in the previous year was corrected in the current year in the country. However, the findings that emerged in this work necessitated the following recommendations for the policy makers, investors and future researcher. The policy makers in Nigeria should see oil exports among others as the backbone behind the inflows of FDI in the country and should be sustained. In addition, the proceeds from oil exports should be diversified and invested in the non-oil sub sector of the economy in order to stimulate a favourable exchange rate which can further encourage further inflows of FDI in the country. Finally, it is needful to ensure that the policy measures are initiated and implemented without a delay for the desired effects to be reflected on time in the country. &nbsp

Panel Cointegration and Granger Causality Approach to Foreign Direct Investment and Economic Growth in BRICS Countries.

In the recent time, empirical studies have failed to examine the long run relationship between FDI inflows, growth rate of economy and economic growth in BRICS countries. This paper employs Johansen Fisher Panel Cointegration and Pairwise Dumitrescu Hurlin Panel Causality Tests to address the objective of this study. The findings from this study show that all the variables have a long run equilibrium relationship. However, panel causality test indicates the existence of unidirectional causality which runs from FDI inflows to economic growth. This study upholds the propositions of Harrod-Domar and Solow growth models, which both submitted that investment is a necessary condition for economic growth in any economy. Similarly, there is one way causality that runs from growth rate of economy to FDI inflows. Therefore, the study recommends that all the policy makers in BRICS countries should embark on more foreign investment oriented policies that would boost further attraction of FDI inflows into all sectors of their economies. Also, policy should be geared towards the promotion of a stable political goodwill and macroeconomic variables that would ensure the sustainable growth rate of BRICS economies.  &nbsp

Impact of Monetary Policy on Exchange Rate in Nigeria: Bound Test and ARDL Approach

The aim of this study is to examine the relationship between monetary policy and exchange rate in Nigeria. The results of past empirical studies have not shown a clear direction about the nature of relationship between these variables in the country and these studies have failed to utilize the methodology in this work, which has created a gap in the literature. Data was collected from the Central Bank of Nigeria Statistical Bulletin from 1990– 2016 and various diagnostic tests such as Unit Roots and Bound Tests were carried out. Consequently, ARDL model was utilized to address the objective of this study. It was discovered in this study that credit reserve requirement and Treasury bill rate have a negative relationship with exchange rate. However, monetary policy rate and broad money supply have a positive relationship with exchange rate in the country. Furthermore, due to these important findings, this paper makes the following vital policy recommendations for the monetary authorities, policy makers, financial institutions regulators and future researchers.  Due to the high volatility in exchange rate in Nigeria currently, the monetary authorities should increase the credit reserve requirement of the commercial banks. Also, the Central bank should increase that rate at which it sells Treasury bill to the commercial banks. The multiplier effect of this policy will reduce the level of high powered money and consequently stabilize the exchange rat

Exchange Rate Volatility and Foreign Capital Inflows in Nigeria: Vector Error Correction Model Approach

The aim of this study is to examine the relationship between exchange rate volatility and foreign capital inflows in Nigeria. The results of the past studies were inconclusive and the uniqueness of this work also lies in the consideration of other important variables such as external debt and remittances as parts of strategic variables to capture foreign capital inflows which the bulk of the past studies have failed to recognize. Data were collected from CBN Statistical Bulletin and UNCTAD investment report from 1990 to 2016. Relevant pre-estimation tests such as unit roots and Johansen conitegration were carried out. Because all the study variables were integrated of order one i.e I(1) and have two cointegrating equations vector error correction model was estimated.. Consequently, the error correction model reveals that about 32 percent of total disequilibrium due to external shock in the previous year is corrected in the current year. Therefore, it will take about three (3) years for the system to adjust back to its long run equilibrium path. Results further showed that FDI inflows increase the level of volatility in exchange rate in the short run but the volatility dies away over time. Conversely, remittance reduces exchange rate volatility while increases in external debt increase exchange rate volatility. It is recommended that the Central Bank of Nigeria should make more efforts to stabilize the exchange rate. In addition, policies and practices which may ease receipt of remittances from citizens in diaspora should be put in place while external debt should be discouraged as much as possible in the countr

Official Development Assistance and Poverty Alleviation in Nigeria (1981-2017)

The aim of this study is to examine the long run equilibrium relationship between official development assistant and poverty alleviation in Nigeria over the period of 1981 to 2017 which past studies have failed to explore. Consequently, the study utilized data from UNCTAD, World Bank database, CBN Statistical Bulletin and Cointegration, DOLS and Granger Causality approach was used to address the objective of this study. However, the major findings in this study are summarized as follows. Firstly, there is a significant negative relationship between official development assistance and poverty level in Nigeria. However, FDI which also constitutes a strategic part of foreign capital in Nigeria does not contribute to poverty alleviation in Nigeria. Furthermore, official development assistance and poverty level in Nigeria have a bidirectional feedback. Due to the findings that emerged from this study, the following recommendations are made for the policy makers that whenever alleviation of poverty is the target of the policy makers in the country, the Nigerian government should be committed to the provision of a sound environment and good governance that can facilitate further inflows of official development assistance from the developed countries, especially G 7 countries. Also, the policy makers in Nigeria should ensure that ODA should be tailored towards projects and programs that have trickle down effects on the masses in the country

What Drives Foreign Direct Investment Inflows? Evidence from a Panel Analysis of BRICS Countries

In the past decade, BRICS countries have been recognized with the sporadic inflows of FDI. An attempt to explore the potential variables that derive the inflows of capital in these countries has sparked off arguments in the literature. Recent past studies have shown mixed results which orchestrated the current necessity to move the frontiers of knowledge and update the existing literature in this regard. Consequently, the study employed various Panel Data Techniques such as Fixed Effects Model, Random Effects Model, Hausman Test and Panel Fully Modified Least Squares. The findings that emerged in this study established among others active variable and passive variable that derive FDI inflows in BRICS economies. The active variables that derive inflows of FDI in BRICS countries are gross domestic product per capita and the standard of living of people in these countries. Whereas market size was discovered to be a passive variable that propels FDI inflows in the BRICS economic region. Based on the findings that originated from this study, it is expedient that this paper recommends as follows: firstly, the policy makers in BRICS countries should embark on further policy measures that will ensure the continuous improvement of living standard of people in one hand and expansion of gross domestic product per capita growth on the other hand. In addition, more policies and stable political goodwill should be embarked upon towards making local market attractive to foreign investors in these countries. &nbsp

The Determinants of Foreign Direct Investment Inflows in Nigeria: An Empirical Investigation

This research work aims at investigating the critical macroeconomic variables that determinethe inflows of FDI in Nigeria over the period of 1990 to 2017 which past studies have not fully explored.Consequently, the study utilized data from UNCTAD, World Bank database and CBN StatisticalBulletin and the Autoregressive Distributed Lag (ARDL) model was used to address the objective ofthis study. The study came up with following findings as summarized thus; the principal determinantsof FDI inflows in Nigeria are the past FDI inflows, market size, exchange rate and growth rate. Thesemacroeconomic variables have a positive and significant impact in driving FDI inflows in Nigeria.However, the inflation rate discourages FDI inflows in the country. Moreover, based on these findings,it is important for this paper to make the following recommendations for both the policy makers andthe investors in Nigeria. The policy makers in the country should be committed towards policy measuresthat will ensure the continuous expansion of the country’s market size, double digits growth rate andexchange rate stability. In the same vein, the policy measures that would address inflation rate problemon FDI inflows in the country should be put in place by the policy makers in Nigeria

What Drives Foreign Direct Investment Inflows in China? ARDL Bound Tests and ECM Approach

This paper examines the variables that drive foreign direct investment in Chinese economy. Recent past studies have shown conflicting results which make further study on this subject matter imperative in the recent times. Data were collected from the United Nations Conference on Trade and Development and World Bank Indicator from 1990– 2017 and the study employed the Autoregressive Distributed Lag (ARDL) model and Error Correction Model (ECM) to address its objective. Consequently, the major findings that originated from the work could be submitted as follows. The result of ECM term confirmed that about 19% of the total disequilibrium in the previous year would be corrected in the current year. Meanwhile, the principal drivers of FDI inflows in China are the large market size and impressive growth rate of the economy. However, GDP per capita could not derive FDI inflows in China. Based on the findings that emerged in this work, it is mandatory this paper makes these recommends for both the policy makers and the future researchers in China that whenever sporadic inflows of FDI is the target of the policy makers in this country, the Chinese government should manipulate the market size and growth rate of its economy.&nbsp

Information and Communication Technology deployment and agricultural value chain nexus in Nigeria

This study examined the point of the agricultural value chain where the deployment of Information and Communication Technology (ICT) is significant. The study used the data sourced from wave 4 (2018/2019) of the Living Standards Measurement Study – Integrated Survey on Agriculture (LSMS-ISA) and applied the Multinomial Logit (MNL) regression. The result showed that ICT deployment is significant for all actors along the agricultural value chain. However, though significant for all actors on the value chain, the estimated coefficients slightly differ. Information and Communication Technology (ICT) is helpful for all the actors along the chain from the estimated coefficients but higher at the farmgate collectors. This can be based on the rationale that, unlike other actors in the chain, the farmgate collectors interact directly or more with the farmers, making ICT more crucial for them than other actors in the chain. The study concludes that ICT can provide farmers and value chain actors with information about the market, among others, new production skills and processes that will help them upgrade, leading to entry into higher-value markets