Suchergebnisse

AbstractThis study examines the triangular relationship between foreign direct investment (FDI), economic growth, and governance quality for 102 developing countries over the period 2000–2018. Compared with the work carried out until now, the novelty of this research lies in using the panel threshold regression (PTR) model to determine the optimal level of governance quality, which, once attained, will make economic growth increase with FDI inflows. We found that the nexus between these three variables is nonlinear. Besides, results show that there is no significant relationship between FDI and economic growth below the threshold level of −1.20 for global governance index (GGI). The results showed that the positive and significant effect of FDI inflows on economic growth begins to manifest once the GGI exceeds this threshold of −1.20. Several policies are proposed and discussed.

AbstractThis study provides evidence of the triangular relationship between governance quality, foreign direct investment, and economic growth. Unlike previous studies in the governance—foreign direct investment—growth literature, this study employed the panel vector autoregressive model to examine the impact of governance quality and foreign direct investment on economic growth. Moreover, we used the impulse response function tool, which was developed in the same context, to better understand the reaction of the two main variables of interest, foreign direct investment, and economic growth, after shocks to the governance quality variable. Finally, the analysis was completed by the variance decomposition of all variables. These analyses were conducted for 102 developing countries from 1996 to 2014. Overall, the results show that inward foreign direct investment has a significant impact and can strongly encourage economic growth. These results indicate that the quality of governance in developing countries does not affect foreign direct investment and economic growth.