Does Foreign Direct Investment Enhance Economic Growth? Evidence from 30 Leading Global Economies. (May 2020)

• Record Type: Journal Article
• Authors: Okwu, Andy Titus; Oseni, Isiaq Olasunkanmi; Obiakor, Rowland Tochukwu
• Is Part Of: Global journal of emerging market economies. Volume 12:Number 2(2020)
• Page Start: 217
• Page End: 230
• Publication Date: 2020-05
• Subjects: FDI inflows -- growth model -- stationarity -- panel data sets -- random and fixed effects; Investments, Foreign -- Periodicals; Economic development -- Periodicals; Developing countries -- Economic conditions -- Periodicals; Developing countries -- Social conditions -- Periodicals; Developing countries -- Politics and government -- Periodicals; 330.9172405
• DOI: 10.1177/0974910120919042
• Languages: English
• ISSNs: 0974-9101

Abstract

Investment expenditure is a major component of aggregate macroeconomic variables in any economy, irrespective of the development status. This article employed relevant econometric methodology on panel data environment to analyze the effects of foreign direct investment (FDI) inflows on economic growth of 30 leading global economies during the period between 1998 and 2017. Other variables considered in the analysis were domestic credit to private sector (DCPS), gross fixed capital formation (GFCF), inflation–consumer prices index (INFPC), trade openness (TOPNESS), and youth unemployment (UEMPYT). The results showed mixed growth effects of the variables in general. Specifically, FDI exerted positive and significant effect on economic growth of the countries during the period. Therefore, this article concluded that FDI inflows enhanced economic growth and emphasized the need to foster more FDI-attracting policies as well as adequate GFCF to complement FDIs for sustainable economic growth potentials. JEL Classification : C23, C33, C51, F21, F43, O47.