IDEAS home Printed from https://ideas.repec.org/a/ris/ecoint/0840.html
   My bibliography  Save this article

Foreign Direct Investment, Exports and Economic Growth in SIDS: Evidence from Saint Lucia

Author

Listed:
  • HOSEIN, Roger

    (Department of Economics, The University of the West Indies, St. Augustine, Trinidad and Tobago)

  • DEONANAN, Regan

    (Department of Economics, The University of the West Indies, St. Augustine, Trinidad and Tobago)

  • EVANS, Kimbert

    (Department of Economics, The University of the West Indies, St. Augustine, Trinidad and Tobago)

Abstract

This paper examines the causal relationships among FDI, exports, and GDP in SIDS using data for Saint Lucia over the period 1980-2015. Using the ARDL bounds test approach to assess cointegration, results indicate that the variables share a long-run relationship when GDP and FDI are the dependent variables. Employing the Toda-Yamamoto test to assess long-run causal linkages, results indicate bi-directional causality between GDP and FDI, unidirectional causality from exports to GDP, and, unidirectional causality from FDI to exports. Accordingly, this paper finds evidence of export led-growth and FDI-led growth in Saint Lucia. These findings suggest that Saint Lucia should continue policies aimed at attracting FDI and expanding the export sector to promote economic growth. Additionally, policies which can diversify the types of FDI that Saint Lucia is currently attracting may be important in promoting exports and spurring higher levels of export led-growth and FDI-led growth. This study has implications for Eastern Caribbean countries and SIDS in other regions. Investimenti diretti esteri, export e crescita economica nei SIDS: evidenze da Santa Lucia Questo lavoro esamina la relazione causale tra investimenti diretti esteri, esportazioni e crescita economica nelle piccole isole in via di sviluppo utilizzando dati relativi all’isola di Santa Lucia nel periodo 1980-2015. I risultati dei bound test ARDL effettuati per valutare la cointegrazione indicano che le variabili hanno una relazione di lungo periodo quando il PIL e gli investimenti diretti esteri sono considerati variabili dipendenti. I risultati del test Toda-Yamamoto per valutare le relazioni causali di lungo periodo indicano che c’è una causalità bi-direzionale tra il PIL e gli investimenti diretti esteri, una causalità uni-direzionale tra le esportazioni e il PIL e tra gli investimenti diretti esteri e le esportazioni. Di conseguenza vi sono evidenze di una crescita export-led e FDI-led a Santa Lucia. Conformemente a ciò a Santa Lucia dovrebbero continuare ad adottarsi politiche finalizzate ad attrarre investimenti diretti esteri e ad aumentare le esportazioni per promuovere la crescita economica. Inoltre, sarebbe opportuno diversificare gli investimenti diretti esteri che Santa Lucia effettivamente potrebbe attrarre al fine di promuovere le esportazioni e i livelli di crescita export-led e FDI-led. I suggerimenti scaturiti da questo studio valgono sia per i paesi est-caraibici che per altre economie di piccole isole.

Suggested Citation

  • HOSEIN, Roger & DEONANAN, Regan & EVANS, Kimbert, 2019. "Foreign Direct Investment, Exports and Economic Growth in SIDS: Evidence from Saint Lucia," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 72(1), pages 47-76.
    • Handle: RePEc:ris:ecoint:0840
    as

    Download full text from publisher

    File URL: http://www.iei1946.it/upload/rivista_articoli/allegati/247_hosein-et-alricfinalx.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    2. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    3. Chemeda, Faye Ensermu, 2001. "The Role Of Exports In Economic Growth With Reference To Ethiopian Country," 2001 Annual meeting, August 5-8, Chicago, IL 20569, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Saba, Charles S., 2023. "Investigation of Telecommunication Infrastructures-Industrialisation-Growth Nexus: Evidence from Disaggregated Panel Data Analysis," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 76(2), pages 209-264.
    2. Hosein, Roger & Satnarine-Singh, Nirvana & Saridakis, George, 2022. "The Spillover Effect of Exports: An Analysis of Caribbean SIDs," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 75(1), pages 1-28.
    3. Iorngurum, Tersoo, 2022. "Foreign Direct Investment, Growth, and Publication Bias in Latin America and the Caribbean," MPRA Paper 112084, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Shahbaz & Pervaz Azim & Khalil Ahmad, 2011. "Exports-Led Growth Hypothesis in Pakistan: Further Evidence," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 182-197.
    2. Mousumi Bhattacharya & Sharad Nath Bhattacharya, 2011. "The Interrelationship Between Merchandise Trade, Economic Growth and FDI Inflows in India," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 9(2), pages 229-244.
    3. M.A. Véganzonès-Varoudakis & H. T. M. Nguyen, 2018. "Investment climate, outward orientation and manufacturing firm productivity: new empirical evidence," Applied Economics, Taylor & Francis Journals, vol. 50(53), pages 5766-5794, November.
    4. Shafaai, Shafizal & Masih, Mansur, 2018. "The dynamics of growth, exports, exchange rate and foreign direct investment: evidence from Malaysia," MPRA Paper 102538, University Library of Munich, Germany.
    5. Sayef Bakari & Mohamed Mabrouki & Abdelhafidh Othmani, 2018. "The Six Linkages Between Foreign Direct Investment, Domestic Investment, Exports, Imports, Labor Force And Economic Growth: New Empirical And Policy Analysis From Nigeria," Journal of Smart Economic Growth, , vol. 3(1), pages 25-43, Juin.
    6. Tidiane Kinda & Patrick Plane & Marie‐Ange Véganzonès‐Varoudakis, 2011. "Firm Productivity And Investment Climate In Developing Countries: How Does Middle East And North Africa Manufacturing Perform?," The Developing Economies, Institute of Developing Economies, vol. 49(4), pages 429-462, December.
    7. Narayan, Seema & Narayan, Paresh Kumar & Mishra, Sagarika, 2010. "Investigating the relationship between health and economic growth: Empirical evidence from a panel of 5 Asian countries," Journal of Asian Economics, Elsevier, vol. 21(4), pages 404-411, August.
    8. Shivneil Kumar Raj & Priteshni Pratibha Chand, 2017. "Analysis of Fiji’s Export and Its Impact on Economic Growth," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 7(4), pages 1-14, April.
    9. Hoang Thanh Mai NGUYEN & Marie-Ange VEGANZONES-VAROUDAKIS, 2017. "Investment climate, outward orientation and manufacturing firm productivity: New empirical evidence," Working Papers 201717, CERDI.
    10. Ghosh, Atish R. & Ostry, Jonathan D. & Qureshi, Mahvash S., 2018. "Taming the Tide of Capital Flows: A Policy Guide," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262037165, December.
    11. Abdullahi Ahmed & Enjiang Cheng & George Messinis, 2011. "The role of exports, FDI and imports in development: evidence from Sub-Saharan African countries," Applied Economics, Taylor & Francis Journals, vol. 43(26), pages 3719-3731.
    12. Aurora A.C. Teixeira & Natércia Fortuna, 2006. "Human capital, trade and long-run productivity. Testing the technological absorption hypothesis for the Portuguese economy, 1960-2001," FEP Working Papers 226, Universidade do Porto, Faculdade de Economia do Porto.
    13. Abrar ul haq, Muhammd, 2015. "Agricultural Export and Economic Growth: A Case Study of Pakistan," MPRA Paper 67249, University Library of Munich, Germany, revised 2015.
    14. Shivneil Kumar Raj & Priteshni Pratibha Chand, 2017. "Analysis of Fiji’s Export and Its Impact on Economic Growth," International Journal of Business and Social Research, LAR Center Press, vol. 7(4), pages 1-14, April.
    15. Bakari, Sayef, 2024. "Link among Domestic Investments, Exports and Economic Growth: New Evidence from Australia," MPRA Paper 121604, University Library of Munich, Germany.
    16. Njimanted, Godfrey Forgha & Nkwetta Ajong Aquilas, 2015. "The Impact of Timber Exports on Economic Growth in Cameroon: An Econometric Investigation," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 3(3), pages 46-60, September.
    17. Alexander Bilson Darku & Richard Yeboah, 2018. "Economic openness and income growth in developing countries: a regional comparative analysis," Applied Economics, Taylor & Francis Journals, vol. 50(8), pages 855-869, February.
    18. Rendón Obando, Hernando & Ramírez Franco, Luz Dary, 2017. "Impacto de la inversión extranjera directa y del grado de apertura de la economía sobre el crecimiento económico para América Latina 1980-2010/Impact of Foreign Direct Investment and Openness Degree o," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 35, pages 217-244, Enero.
    19. Mina Baliamoune-Lutz, 2002. "Assessing the Impact of One Aspect of Globalization on Economic Growth in Africa," WIDER Working Paper Series DP2002-91, World Institute for Development Economic Research (UNU-WIDER).
    20. Matija Rejec & Slavica Penev, 2011. "Attractiveness of Western Balkan Countries for FDI," Book Chapters, in: Mirjana Radovic Markovic & Srdjan Redzepagic & João Sousa Andrade & Paulino Teixeira (ed.), Serbia and the European Union: Economic Lessons from the New Member States, edition 1, volume 1, chapter 2, pages 27-46, Institute of Economic Sciences.

    More about this item

    Keywords

    ARDL; Exports; FDI; GDP; Saint Lucia; SIDS; Toda-Yamamoto;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:ecoint:0840. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Angela Procopio (email available below). General contact details of provider: https://edirc.repec.org/data/cacogit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.