The Effect of Foreign Capital Inflows on Economic Growth of the Southern African Customs Union (SACU) Countries
0
조회
0
다운로드
2
인용
0
참고문헌
키워드
초록
The existing literature regarding the impact of foreign capital inflows on economic growth exhibits inconclusive results, in both theoretical and empirical perspectives. It depends on the studied country and studied period. In addition, most of the previous works examine the effect of each type of foreign capital individually. The regression with a single independent variable of foreign capital may lead to an omitted variable bias problem since all kinds of foreign capitals are important for economic growth of developing countries. Consequently, this article examines the effect of foreign capital inflows (foreign direct investment, international remittance, official development assistance and foreign debt) on economic growth of the member states (Botswana, Lesotho, South Africa and Swaziland, excluded Namibia) of the Southern African Customs Union (SACU). The study refines the neoclassical growth model as the theoretical framework and employs the auto regressive distributed lag (ARDL) model for the empirical estimations, using annual data during 1975 to 2017. The empirical findings reveal that the foreign direct investment contributes to economic growth only in South Africa and Swaziland. The international remittance affects economic growth in all four countries, but the negative effects are detected in Lesotho and South Africa. While the official development assistance shows the positive effect on economic growth of Swaziland, the negative effect is found in Botswana. The external debt also contributes to economic growth of Botswana, Lesotho and Swaziland. These imply that the effect of foreign capital inflows on economic growth depends on type of capital and a certain recipient country.
Abstract
The existing literature regarding the impact of foreign capital inflows on economic growth exhibits inconclusive results, in both theoretical and empirical perspectives. It depends on the studied country and studied period. In addition, most of the previous works examine the effect of each type of foreign capital individually. The regression with a single independent variable of foreign capital may lead to an omitted variable bias problem since all kinds of foreign capitals are important for economic growth of developing countries. Consequently, this article examines the effect of foreign capital inflows (foreign direct investment, international remittance, official development assistance and foreign debt) on economic growth of the member states (Botswana, Lesotho, South Africa and Swaziland, excluded Namibia) of the Southern African Customs Union (SACU). The study refines the neoclassical growth model as the theoretical framework and employs the auto regressive distributed lag (ARDL) model for the empirical estimations, using annual data during 1975 to 2017. The empirical findings reveal that the foreign direct investment contributes to economic growth only in South Africa and Swaziland. The international remittance affects economic growth in all four countries, but the negative effects are detected in Lesotho and South Africa. While the official development assistance shows the positive effect on economic growth of Swaziland, the negative effect is found in Botswana. The external debt also contributes to economic growth of Botswana, Lesotho and Swaziland. These imply that the effect of foreign capital inflows on economic growth depends on type of capital and a certain recipient country.
참고문헌 (46)
- Ahortor, Christian R. K., "The Impact of Remittances on Economic Growth in Small-Open Developing Economies", Journal of Applied Sciences, 9 (2009)
- Akram, Naeem, "Impact of Public Debt on the Economic Growth of Pakistan", The Pakistan Development Review, 50(4) (2011)
- Amuedo-Dorantes, Catalina, "Workers’ Remittances And The Real Exchange Rate: A Paradox of Gifts", World Development, 32(8) (2004)
- Do Workers’ Remittances Promote Economic Growth?, "Barajas, Adolfo", International Monetary Fund, ~, pp.IMF Working Paper WP, 2009[DOI]
- Barro, Robert J., "Economic Growth in a Cross Section of Countries", The Quarterly Journal of Economics, 106(2) (1991)
- Boboye, Ajayi Lawrence, "Effect Of External Debt on Economic Growth and Development of Nigeria", International Journal of Business and Social Science, 3(12) (2012)
- Do capital inflows boost growth in developing countries ? Evidence from Sub-Saharan Africa, "Calderon, Cesar", World Bank, ~, pp.Policy Research working paper; No. WPS 7298 (2015)
- Chenery, Hollis B., "Foreign Assistance and Economic Development", American Economic Review, 56 (1966)
- Chiwira, Oscar, "Foreign Direct Investment and Economic Growth in Botswana: A Dynamic Causality Test", British Journal of Economics, Management & Trade, 11(3) (2016)
- External Debt And Growth In Developing Countries: A Sensitivity and Causal Analysis, "Chowdhury, Abdur", World Institute for Development Economics (UNU-WIDER), ~, pp.WIDER Discussion Papers No. 2001 (2001), 95
- Driffield, Nigel, "Impact of FDI, ODA and Migrant Remittances on Economic Growth in Developing Countries: A Systems Approach", The European Journal of Development Research, 25(2) (2013)
- Technology Spillovers from Foreign Direct Investment—A Survey Asian Development Bank Working Paper, "Fan, Emma Xiaoqin", World Bank, ~ (2002)
- Farole, Thomas, "Making Foreign Direct Investment Work for Sub-Saharan Africa: Local Spillovers and Competitiveness in Global Value Chains" (2014), World Bank
- Fowowe, Babajide, "Remittances and Economic Development in Lesotho: Does Financial Sector Development Matter?", Economics Bulletin, 36(4) (2016)
- Girma, Haile, "The Impact of Foreign Aid on Economic Growth: Empirical Evidence From Ethiopia (1974-2011) Using ARDL Approach", Journal of Research in Economics and International Finance, 4(1) (2015)
- Giuliano, Paola, "Remittances, Financial Development and Growth", Journal of Development Economics, 90(1) (2009)
- Gui-Diby, Steve, "Impact of Foreign Direct Investments on Economic Growth in Africa: Evidence from Tree Decades of Panel Data Analyses", Research in Economics, 68 (2014)
- Gutema, Gutu, "Determinants of Economic Growth in Africa" (2018), Palgrave Macmillan
- Herzer, Dierk, "In Search of FDI-Led Growth in Developing Countries: The Way Forward", Economic Modelling, 25(5) (2008)
- Hossain, Basharat, "The Effect of Foreign Aid on The Economic Growth of Bangladesh", Journal of Economics and Development Studies, 2(2) (2014)
- Remittances, Growth and Poverty: New Evidence from Asian Countries, "Imai, Katsushi", The University of Manchester, ~, pp.The School of Economics Discussion Paper Series 1125 (2011)
- Jawaid, Syed Tehseen, "Foreign Capital Inflows And Economic Growth of Pakistan", Journal of Transnational Management, 22(2) (2017)
- Jayaraman, T.K., "Does External Debt Lead To Economic Growth In Pacific Island Countries", Journal of Policy Modeling, 31(2) (2009)
- Foreign Direct Investment and Economic Growth: The Role of Domestic Financial Sector, "Khan, Muhammad Arshad", Pakistan Institute of Development Economics, ~, pp.PIDE Working Paper No. 2007:18 (2007)
- Krugman, Paul R., "Financing Vs. Forgiving a Debt Overhang", Journal of Development Economics, 29 (1988)
- Public Debt and Growth, "Kumar, Manmohan S.", International Monetary Fund, ~, pp.IMF Working Paper. No. 10 (2010), 174
- Lucas, Robert E., "On the Mechanics of Economic Development", Journal of Monetary Economics, 22 (1988)
- Makhetha, Leseko, "Foreign Direct Investment, Trade Openness and Growth Nexus In Lesotho", Journal of Economic and Financial Sciences, 10(1) (2017)
- Modisaemang, Goitseone, "Is External Debt A Threat To Botswana's Economic Growth? : An Empirical Enquiry", International Journal Of Economic Issues, 8(1) (2015)
- A meta-analysis of the relationship between debt and growth, "Moore, Winston", 1~23, pp.Munich personal RePEc archive paper No. 21474 (2008)
- Mustapha A. Akinkunmi, "Empirical Investigation Of External Debt-Growth Nexus In Sub-Saharan Africa", African Research Review, 11(3) (2017)
- Ntshakala, Precious Lomagugu, "Effects of Public Debt on Economic Growth in Swaziland", International Journal of Business and Commerce, 5(1) (2014)
- Nwaoguand, Uwaoma G., "FDI, Foreign Aid, Remittance and Economic Growth in Developing Countries", Review of Development Economics, 19(1) (2015)
- Nyoni, Thabani, "Foreign Aid –Economic Growth Nexus:A Systematic Review of Theory & Evidence from Developing Countries", Dynamic Research Journals' Journal of Economics & Finance, 2(7) (2017)
- Aid unpredictability and Economic Growth in Kenya, "Ojiambo, Elphas", African Development Bank, ~, pp.African Development Bank, Working Paper 226 (2015)
- Impact of external debt shocks on economic growth in Nigeria: a SVAR analysis, "Onafowora, Olugbenga", Economic Change and Restructuring, ~ (2017)
- Pesaran, Hashem M., "Bounds Testing Approaches to the Analysis of Level Relationships", Journal of Applied Econometrics, 6(3) (2001)
- Phiri, Maurice W., "The Impact of Aid on the Economic Growth of Developing Countries (LDCs) in Sub-Saharan Africa", Gettysburg Economic Review, 10(4) (2017)
- Presbitero, Andrea F., "The Debt-Growth Nexus in Poor Countries: A Reassessment. Economics", The Open-Access, Open-Assessment E-Journal, 2(2008-30) (2008)
- Selhausen, Felix, "On Geography and Institutions as Determinants of Foreign Direct Investment. A cross country comparative analysis of sub-Saharan African relative to developing countries", Documentos de trabajo sobre cooperación y desarrollo 200906, Cátedra de Cooperación Internacional y con Iberoamérica (COIBA), Universidad de Cantabria, ~ (2009)
- Solow, Robert M., "A Contribution to The Theory of Economic Growth", Quarterly Journal of Economics, 70(1) (1956)
- Solow, Robert M., "Technical Change and The Aggregate Productions", Reviews of Economic and Statistics, 39 (1957)
- Suleiman, Najat Nassor, "Foreign Direct Investments (FDI) and Economic Growth: Empirical Evidence From Southern Africa Customs Union (Sacu) Countries", Journal of Economics and Management, 7(1) (2013)
- Sunde, Tafirenyika, "Foreign Direct Investment, Exports And Economic Growth:ARDL and Causality Analysis for South Africa", Research in International Business and Finance, 41 (2017)
- Toda, Hiro Y., "Statistical Inference in Vector Autoregressions with Possibly Integrated Processes", Journal of Econometrics, 66(1-2) (1995)
- Toda, Hiro Y., "Finite Sample Properties of Likelihood Ratio Tests for Cointegrating Ranks when Linear Trends Are Present", Review of Economics & Statistics, 76(1) (1994)