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Foreign Direct Investment and Growth: An Empiricial Investigation Based on Cross-Country Comparison

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  • Ozturk, Ilhan
  • Kalyoncu, Huseyin

Abstract

This paper investigates empirically the impact of FDI on economic growth of Turkey and Pakistan over the period of 1975-2004. To analyse the causal relationship between FDI and economic growth, the Engle-Granger cointegration and Granger causality tests are used. It is found that these two variables are cointegrated for both countries studied. Our empirical findings suggest that it is GDP that causes FDI in the case of Pakistan, while there is strong evidence of a bi-directional causality between the two variables for Turkey.

Suggested Citation

  • Ozturk, Ilhan & Kalyoncu, Huseyin, 2007. "Foreign Direct Investment and Growth: An Empiricial Investigation Based on Cross-Country Comparison," MPRA Paper 9636, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9636
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    References listed on IDEAS

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    6. Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
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    8. Luiz R. de Mello Jr., 1997. "Foreign Direct Investment in Developing Countries: A Selective Survey," Studies in Economics 9701, School of Economics, University of Kent.
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    10. V. N. Balasubramanyam & M. Salisu & David Sapsford, 1999. "Foreign direct investment as an engine of growth," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 8(1), pages 27-40.
    11. Luiz de Mello, 1997. "Foreign direct investment in developing countries and growth: A selective survey," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 1-34.
    12. repec:bla:jecsur:v:12:y:1998:i:3:p:247-77 is not listed on IDEAS
    13. Harrison, Ann, 1994. "Multinationals in economic development: the benefits of FDI," MPRA Paper 36270, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. Faruk G rsoy & H seyin Kalyoncu, 2012. "Foreign Direct Investment and Growth Relationship in Georgia," International Journal of Economics and Financial Issues, Econjournals, vol. 2(3), pages 267-271.
    2. Kumar, Sundaram, 2009. "Investigating causal relationship between stock return with respect to exchange rate and FII: evidence from India," MPRA Paper 15793, University Library of Munich, Germany.
    3. Völlmecke, Dominik & Jindra, Björn & Marek, Philipp, 2016. "FDI, human capital and income convergence—Evidence for European regions," Economic Systems, Elsevier, vol. 40(2), pages 288-307.
    4. Melisa Chanegriha & Chris Stewart & Christopher Tsoukis, 2020. "Testing for causality between FDI and economic growth using heterogeneous panel data," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 29(5), pages 546-565, July.
    5. Bilgili, Faik & Tülüce, Nadide Sevil Halıcı & Doğan, İbrahim, 2012. "The determinants of FDI in Turkey: A Markov Regime-Switching approach," Economic Modelling, Elsevier, vol. 29(4), pages 1161-1169.
    6. Haider Mahmood & Tarek Tawfik Yousef Alkhateeb, 2018. "Foreign Direct Investment, Domestic Investment and Oil Price Nexus in Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(4), pages 147-151.
    7. Tatomir, Cristina F. & Popovici, Oana, 2011. "Eyes on Romania: what to look when investing here?," MPRA Paper 36140, University Library of Munich, Germany.
    8. STOENOIU Carmen-Elena & SERBAN Mioara Florica & CRISTEA Ciprian, 2021. "Foreign Investments In The Economy Of Eastern European Countries," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 73(1), pages 101-113, March.
    9. Ahsen Mukhtar & Muhammad Asif & Ghamz-e-Ali Siyal & Khalid Zaman, 2014. "Institutional-Macroeconomic Nexus: Inducement on Foreign Direct Investment (FDI) in Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 2(11), pages 465-479, November.
    10. Syed Imran Ali Meerza, 2012. "Causal links between trade, foreign direct investment and economic growth for Bangladesh," SDSU Working Papers in Progress 12012, South Dakota State University, Department of Economics.
    11. Rami Hodrob, 2017. "The Impact of Foreign Direct Investment on Palestinian Economic Growth," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 550-557.
    12. Safwat Alaa & Salah Ashraf & Elsherif Marwa, 2021. "The Impact of Foreign Direct Investment on the Economic Growth of Egypt (1980-2018)," International Journal of Economics and Financial Issues, Econjournals, vol. 11(5), pages 74-85.

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    More about this item

    Keywords

    Economic growth; foreign direct investment; Granger causality;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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