Financial development, FDI and economic growth: evidence from Sudan
06 Aug 2018-International Journal of Social Economics (Emerald Publishing Limited)-Vol. 45, Iss: 8, pp 1236-1249
TL;DR: In this paper, the effect of financial development and foreign direct investment (FDI) on economic growth in Sudan has been examined using time series data from 1970 to 2014, and the results show that financial development is more beneficial to economic growth than FDI.
Abstract: The effect of foreign direct investment (FDI) on economic growth is widely believed to be contingent on the development of the financial sector. Nevertheless, as the possibility that the effect of financial development on growth being contingent on FDI has been neglected in existing literature, the authors have investigated it in this paper. In general, the purpose of this paper is to examine the effect of financial development and FDI on economic growth in Sudan using annual data from 1970 to 2014.,Since most of the macroeconomic variables are subject to unit root problem, the time series data are assessed using unit root and cointegration tests with/without structural break. Moreover, the study uses the fully modified ordinary least squares and the dynamic ordinary least squares techniques to estimate the long-run model.,The results of the cointegration tests provide evidence that a long-run relationship exists among variables even after accounting for the structural break. The results show that financial development and FDI are positive and significant in explaining economic growth in Sudan. Financial development is found to be more beneficial to economic growth than FDI. Moreover, the findings reveal that FDI leads to better economic performance through financial development. Interestingly, the findings of the study show that the effect of financial development on economic growth is further enhanced by the inflows of FDI.,The government should focus on promoting FDI in more productive sectors. In addition, further cooperation with multinational enterprises is needed to increase FDI in the country.,This is the first paper that empirically examines both the interlinked impact of FDI on growth through financial development and the impact of financial development on economic growth through FDI in Sudan using appropriate econometric methods.
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TL;DR: The pivotal role of energy in the progression of economic growth cannot be overlooked as mentioned in this paper and given its importance to policymakers, the influence of energy use on economic growth is undeniably crucial and...
Abstract: The pivotal role of energy in the progression of economic growth cannot be overlooked. Given its importance to policymakers, the influence of energy use on economic growth is undeniably crucial and...
58 citations
Cites result from "Financial development, FDI and econ..."
...This process in turn generates new job opportunities, thereby stimulating economy-wide long-term domestic productivity and boosting economic growth.9 This finding agrees with that by Fasanya (2012), Tang and Tan (2014), Azam (2016), and Sirag et al. (2018)....
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TL;DR: In this article, the authors investigated the relationship between trade openness, education, political stability, corruption, and rule of law in sub-Saharan Africa and found that trade openness has a negative, statistically significant relationship with income inequality.
Abstract: The motivation for this study stems from the United Nations Sustainable Development Goals (UN‐SDGs) and their impact by 2030. The UN highlights 17 SDGs that address pertinent local and global issues, one of which—SDG‐10—has been devoted to reducing inequality. This study investigates the nexus between trade openness, foreign direct investment (FDI), and income inequality in sub‐Saharan Africa using panel data from 2000 to 2015 and the generalized method of moment (GMM) technique approach. The findings show that FDI and income have a negative, statistically significant relationship with income inequality, signifying that as FDI and income per capita increase, the level of income inequality decreases. However, trade openness, education, political stability, corruption, and rule of law have a positive, statistically significant relationship with inequality. This study, therefore, offers some recommendations that will help policymakers. First, develop good policies to attract more foreign investors, which will contribute to creating employment opportunities in the region. Second, create more infrastructures to provide good quality education. Third, implement a good policy to motivate local production which will contribute to creating jobs. Fourth, build a strong institution(s) to fight against corruption.
50 citations
TL;DR: In this article, the authors investigated the interrelationship of renewable energy consumption, carbon dioxide emission, foreign direct investment, and economic growth in 190 countries of the world for the period of 1980 to 2018.
Abstract: Studies on the role of renewable energy consumption and other environmental factors in carbon emission have got considerable attention recently, and they are predicted to get exaggerated in the coming decades. Energy usage increases economic growth and development of a country and backs to global warming and carbon emission which affect the local environment. For the prosperity of a country, it is felt crucial to measure the unavoidable impacts which effect environmental quality. Consequently, the current study investigates the interrelationship of renewable energy consumption, carbon dioxide emission, foreign direct investment, and economic growth in 190 countries of the world for the period of 1980 to 2018. By employing both static and dynamic models, the findings indicate that carbon emission, renewable energy consumption, foreign direct investment, and economic growth affect each other significantly whereas renewable energy consumption has been found beneficial for environmental quality; however, it decreases the inflow of FDI. RE has a decreasing impact, while FDI and carbon emission promote economic growth. The study suggests the promotion of renewable energy resources and policies related to FDI to promote the quality of the environment and achieve economic growth as well.
25 citations
TL;DR: In this paper, the authors investigated the role of institutional quality in foreign direct investment led growth hypothesis in Nigeria from 1984 to 2018 using autoregressive distributed lag estimation technique and concluded that good institutional quality matters for FDI and growth.
Abstract: This paper investigates the moderating role institutional quality plays in foreign direct investment led growth hypothesis in Nigeria from 1984 to 2018 using autoregressive distributed lag estimation technique. Specifically, the study contributes to the literature by using seven different institutional indicators to moderate the effect of foreign direct investment on economic growth. The findings reveal that foreign direct investment has no direct (positive) effect on economic growth in Nigeria. However, the interactive effect of institutional indicators with foreign direct investment has significant impact on economic growth in most of the models. This implies that institutions serve as important absorptive capacity that needs to be strengthened for the country to benefit maximally from the growth effect of foreign direct investment. This study therefore concludes that good institutional quality matters for foreign direct investment and growth in Nigeria.
18 citations
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