This paper aims to investigate the relationship between foreign direct investment (FDI), export (EXP) and gross domestic product (GDP). The impact of interaction between EXP and FDI on GDP was also examined. For this purpose, quantitative approach was adopted. Secondary data for 49 countries whose gross national income per capita was less than 6 000 $ were collected. Spearman correlation, robust regression and causal mediation analysis were performed.
Spearman correlation showed very strong correlation among GDP-FDI-EXP. Robust regression indicated that all regression coefficients are statistically significant indicating a positive moderation effect of the interaction between EXP and FDI on GDP. Causal mediation effect indicated that average causal mediated effect is statistically significant while average direct effect is not statistically significant, indicating full mediation. The effect of FDI on GDP is transmitted to GDP through increasing EXP. The effect of the interaction of FDI and GDI was found statistically significant. The results are consistent with empirical studies and existing theories.
Table of Contents
1. INTRODUCTION
2. LITERATURE REVIEW
3. METHODOLOGY and DATA
4. RESULT DISCUSION
Research Objectives and Key Topics
The main objective of this study is to investigate the relationship between Foreign Direct Investment (FDI), exports (EXP), and Gross Domestic Product (GDP) in developing countries, specifically analyzing the mediating and moderating roles of exports in the FDI-GDP relationship.
- The quantitative relationship between FDI, EXP, and GDP.
- The impact of interaction terms between FDI and exports on economic growth.
- Mediation analysis to understand how FDI impacts GDP through exports.
- Use of robust regression and causal mediation analysis in developing nations.
Excerpt from the Book
1.INTRODUCTION
Increasing economic growth is one of the priorities for all countries. Nevertheless, the determinants of economic growth are still unknown as indicated by Christian (2010). The relation between trade, FDI and GDP has received a great deal of attention both in the theoretical and empirical literature. FDI and EXP were found to be among factors that increase GDP as predicted by Bhagwati hypothesis (Sakyi & Egyir, 2017). However, there is on consensus on the impact of FDI on GDP as findings are still contrasting. Some researchers found that FDI had positive impact on GDP, (Nadeem, Naveed, Zeeshan & Sonia, 2013; Qaiser, Salman, Ali, Hafiz & Muhammad, 2011; Sauwaluck,2012; Jugurnath, Chuckun and Fauzel, 2016). Whereas others found negative impact (Dierk;2010; Abdelbagi,2015). Using correlation analysis and regression model, they identified a positive relationship between FDI and GDP. Similarly, findings are inconsistent regarding the impact of trade on economic growth. Some researchers indicated that trade had positive impact on economic growth while other find negative impact. For instance, Keho (2017) identified that trade openness had positive effects on economic growth both in the short and long-run in Côte d’Ivoire. Kore and Pierre (2019) indicated that trade openness had a negative impact on GDP per capita in the long-run in economic community of Western African States. The conflicting findings on the effect of trade on economic growth makes impossible prediction of the impact of trade on economic growth. There is still a gap knowledge on the impact of trade, FDI on economic growth.
Summary of Chapters
1. INTRODUCTION: Outlines the research priorities regarding economic growth and identifies the gap in literature concerning the inconsistent impact of FDI and trade on GDP.
2. LITERATURE REVIEW: Reviews existing theoretical and empirical studies on the relationship between FDI, exports, and economic growth, highlighting various methodologies and conflicting findings.
3. METHODOLOGY and DATA: Describes the quantitative approach, the collection of secondary data for 49 developing countries, and the statistical tools used, including robust regression and mediation analysis.
4. RESULT DISCUSION: Presents the statistical findings from descriptive statistics, correlation analysis, robust regression, and causal mediation analysis, discussing their implications for economic growth.
Keywords
Gross Domestic product, Export, Foreign direct investment, Economic growth, Robust regression, Mediation analysis, Developing countries, Trade openness, Bhagwati hypothesis, Causality, Statistical analysis, Correlation.
Frequently Asked Questions
What is the primary focus of this research?
This research focuses on analyzing the impact of foreign direct investment and exports on the gross domestic product of developing countries.
What are the central themes explored in the study?
The central themes include the relationship between FDI and GDP, the role of exports in this relationship, and the identification of how these variables interact to influence economic development.
What is the main research question?
The primary research question is: "To what extent are FDI and exports related to GDP in developing countries?"
Which scientific methodology does the paper employ?
The study adopts a quantitative approach, utilizing secondary data from 49 countries and employing statistical methods such as Spearman correlation, robust regression, and causal mediation analysis.
What is covered in the main body of the work?
The main body reviews the relevant literature, details the methodology and data collection processes, and discusses the empirical results obtained from the statistical models.
Which keywords characterize this work?
Key terms include Gross Domestic Product, Export, Foreign Direct Investment, Economic Growth, and Mediation Analysis.
What did the causal mediation analysis reveal about FDI?
The analysis indicated that FDI has no direct effect on GDP, but rather operates through full mediation via exports, meaning the effect of FDI on GDP is transmitted through increased export activity.
Is the Bhagwati hypothesis supported by the results?
Yes, the results regarding the significant interaction between FDI and exports are consistent with the growth-enhancing effects predicted by the Bhagwati hypothesis.
How does the study address the lack of data normality?
The study identifies that the data is not normally distributed based on skewness coefficients and thus adopts non-parametric tests and robust regression methods to ensure accurate results.
What policy recommendation does the author provide?
The author recommends that developing countries should prioritize stimulating foreign investment, particularly for sectors that are oriented toward export promotion.
- Citar trabajo
- Antoine Niyungeko (Autor), 2020, The Impact of Foreign Direct Investment and Export on Gross Domestic Products in Developing Countries, Múnich, GRIN Verlag, https://www.grin.com/document/960317
