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Application of Multi-Criteria Decision-Making Model and GM (1,1) Theory for Evaluating Efficiency of FDI on Economic Growth: A Case Study in Developing Countries

Author

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  • Chia-Nan Wang

    (Department of Industrial Engineering and Management, National Kaohsiung University of Science and Technology, Kaohsiung 80778, Taiwan)

  • Anh Phuong Le

    (Department of Industrial Engineering and Management, National Kaohsiung University of Science and Technology, Kaohsiung 80778, Taiwan)

Abstract

Foreign direct investment (FDI) and corporate social responsibility (CSR) spending are one of the major factors in improving sustainable economic development of a country. Therefore, this study focuses on the multi criteria application of FDI and sustainability factors (CSR spending) in various developing countries to explore its impact and decision making for sustainable economic growth. The study uses a case study methodology whereby FDI, exchange rate, and CSR expenditure data from 20 countries were used to assess the efficiency in sustainable economic growth. Data were collected from the World Bank for 20 Asian and African developing countries during 2012–2017 and analyzed using GM (1,1), mean absolute percentage error (MAPE), Malmquist productivity index (MPI)-data envelopment analysis (DEA), and the slacks-based measure of efficiency (SBM) model. Correlation analysis is used to find the relationship for FDI, CSR, exchange rate, gross domestic product (GDP), and GDP per capita (GDPPC). The results of the Malmquist productivity index and the frontier effect clearly highlight that a few countries have witnessed a great improvement in terms of productivity and technological progression. Therefore, the decision makers must adopt the model of those countries with respect to sustainable development of the nation. This study helps developing nations as well as researchers to benchmark efficient countries and follow their strategies to develop a new one for utilizing FDI and CSR spending in sustainable economic development. The study also helps policy makers in multi criterion application of FDI and CSR for decision making in economic development.

Suggested Citation

  • Chia-Nan Wang & Anh Phuong Le, 2019. "Application of Multi-Criteria Decision-Making Model and GM (1,1) Theory for Evaluating Efficiency of FDI on Economic Growth: A Case Study in Developing Countries," Sustainability, MDPI, vol. 11(8), pages 1-29, April.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:8:p:2389-:d:225009
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    References listed on IDEAS

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    2. Feifei Jin & Lidan Pei & Huayou Chen & Reza Langari & Jinpei Liu, 2019. "A Novel Decision-Making Model with Pythagorean Fuzzy Linguistic Information Measures and Its Application to a Sustainable Blockchain Product Assessment Problem," Sustainability, MDPI, vol. 11(20), pages 1-17, October.
    3. Dolores Gallardo-Vázquez & Flavio Hourneaux Junior & Marcelo Luiz Dias da Silva Gabriel & Luis Enrique Valdez-Juárez, 2021. "On Earth as It Is in Heaven: Proxy Measurements to Assess Sustainable Development Goals at the Company Level through CSR Indicators," Sustainability, MDPI, vol. 13(2), pages 1-20, January.
    4. Shaolong Zeng & Yiqun Liu & Junjie Ding & Danlu Xu, 2020. "An Empirical Analysis of Energy Consumption, FDI and High Quality Development Based on Time Series Data of Zhejiang Province," IJERPH, MDPI, vol. 17(9), pages 1-17, May.
    5. Phi-Hung Nguyen & Thi-Ly Nguyen & Hong-Quan Le & Thuy-Quynh Pham & Hoang-Anh Nguyen & Chi-Vinh Pham, 2023. "How Does the Competitiveness Index Promote Foreign Direct Investment at the Provincial Level in Vietnam? An Integrated Grey Delphi–DEA Model Approach," Mathematics, MDPI, vol. 11(6), pages 1-30, March.

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