Outward FDI and Domestic Investment: Evidence from World’s Largest Economies

This study provides empirical evidence of the impacts of FDI outflows on domestic investment in the world’s largest economies using panel data analysis. Our estimates using system-Generalized Method of Moments (GMM) suggest that FDI outflows have positive effects on domestic investment. From 2002-2014, OFDI had significant long-term effects on domestic investment among the world’s largest economies. Our system-GMM model results show that a one dollar increase in OFDI leads to an increase of 0.0894 dollars of domestic investment in the long term. Keywords: Outward FDI; Domestic investment; Endogeneity; Panel Data JEL Classification numbers: C23; F21; F22; F2

The Falling Dollar and Its Impact on the Saudi Economy

As foreign exchange studies show, after a fairly strong performance in 2014, the US Dollar (USD) plunged in 2015 in relation to the Euro, British Pound, Japanese Yen, and other global currencies (US Forex 2015). While the trend on US currency fall similarly happened in the past, the weak global confidence now on the US economy has cast serious apprehension on the prospect for any renewed global economic stability. Whenever the USD, as central world currency, declines or appreciates significantly in value, the change impacts the economies of most nations around the world (Amadeo 2015).  One of the countries that stand most vulnerable to any serious and unwanted dysfunction of the USD is Saudi Arabia, which, as a matter of key economic policy, has fixed its currency exchange to Saudi Arabia Riyals (SAR) 3.75 to USD 1.00 since 1986 (Al-Hamidy 2013).  This paper aims at Highlighting the risks of devaluation of the dollar on the Saudi economy There are seven sections in the paper after the introduction. In sections two The changing price of gold and oil in term of USD…; section three The Impacts of fixed exchange rate on the Saudi Economy …;The rationale and implication for the fixed rate,  Policy measures to overcome the risk caused by the depreciation of USD…Possible Policy Options in the Short…, and in the last section Concluding Remarks…

The Long-Run Effect of Outward Foreign Direct Investment and Macroeconomic Variables on Domestic Investment: Evidence from World Major Economies Using Panel ARDL Approach

In this paper, we investigate relationship between outward foreign direct investment flows and domestic investment among thirteen world major economies over time period 1970-2013. From 1970-2013, had outward foreign direct investment flows along with macroeconomic control variables had significant long-term effects on domestic investment among world major economies. Following the latest dynamic techniques of panel data analysis of pooled mean group and dynamic fixed effect estimators proposed by Pesaran et al. (1999), we find strong evidence of positive impact of outward foreign direct investment flows on domestic investment. Pooled mean group estimator results show that one dollar increase in foreign direct investment outflows result in increase of Domestic investment by 0.49 dollars. Dynamic fixed effect result findings also strongly support positive impact of foreign direct investment outflows on domestic investment .i.e. (one dollar increase in foreign direct investment outflows result in increase of domestic investment by 0.87 dollars).Our result findings confirm that foreign direct investment outflows along with  macroeconomic control variables have positive and significant impact on domestic investment. Dumitrescu Hurlin Panel Causality test results show that there is pairwise causality running between the variables. Keywords: Outward FDI; Domestic investment; Cointegration; Panel Dat

The Long-Run Effect of FDI Inflows on Total Factor Productivity: Evidence from African Countries

From 2001-2014, had foreign direct investment inflows had significant long-term effects on total factor productivity in African countries. Following the latest dynamic techniques of panel data analysis of pooled mean group and mean group estimator (the Pesaran and Smith 1995, Journal of Econometrics 68: 79-113), we find strong evidence of insignificant impact of FDI inflows on total factor productivity. Augmented mean group estimator(AMG) introduced by Eberhardt and Teal (2010, Discussion Paper 515, Department of Economics, University of Oxford) and the Pesaran (2006,Econometrica 74: 967-1012) common correlated effects mean group estimator results also strongly support insignificant impact FDI inflows on total factor productivity in the long run in African economies. Augmented mean group estimator, common correlated effects mean group estimator and pooled mean group estimator result findings show that covariates or control variables (Trade and Domestic investment) have significant effects on total factor productivity in the long run. The result findings show that covariates or control variables are important determinants (factors) in defining exact relationship between FDI inflows and total factor productivity. Keywords: FDI inflows; Total Factor Productivity; Panel Data; Economic growth JEL Classification numbers: C33; F21; F2

Inward FDI, Outward FDI and Domestic Investment: Evidence from Asian Economies Using Panel Data Analysis

This study measures effects of FDI inflows and outflows on domestic investment in Asian economies using panel data analysis. Our estimates using system-Generalized Method of Moments (GMM) suggest that FDI inflows (IFDI) have positive and significant effects on domestic investment but outward FDI (OFDI) is negatively associated with domestic investment. From 2004-2014, OFDI and IFDI had significant long-term effects on domestic investment among the Asian economies. Our system Generalized Method of Moments (GMM) model results show that one dollar increase in FDI inflows leads to increase domestic investment by 0.3081 dollars. Our system Generalized Method of Moments (GMM) model results show that one dollar increase in FDI outflows leads to decrease domestic investment by 0.2704 dollars. Our result findings are robust with different econometric techniques measuring effects of inward FDI and outward FDI on domestic investment among Asian economies. Keywords: FDI inflows; FDI outflows; Domestic investment; Endogeneity; Panel Data JEL Classification numbers: C23; F21; F22; F2