This study analyzes how Foreign Direct Investment affects the rate of economic development among nations in the EAC with the empirical evidence of Burundi.The paper indicates that there is a link between foreign direc...This study analyzes how Foreign Direct Investment affects the rate of economic development among nations in the EAC with the empirical evidence of Burundi.The paper indicates that there is a link between foreign direct investment(FDI),gross domestic product(GDP),human capital,and openness with support of yearly time-series data from 1989 to 2017.The results from the Vector Error Correction Model(VECM)analysis technics discover that all the variables in long-term they move together.The findings also discovered that there is short-term causality running from GDP and human capital to FDI and no short-run causality found from openness to FDI as a result of Burundi’s policies that do not implement market seeker FDI.For VECM validation,the paper went through some post estimation diagnostic tests such as Lagrange multiplier tests and Jarque-Bera test,the results did not indicate any autocorrelation among the variables as the residuals were normally distributed.Openness being an important factor to attracting foreign investors,it is very crucial for Burundi to revise its trade policies and encourage a conducive environment that promotes foreign investment penetration by promoting and encouraging both domestic and foreign investors and keep improving human capital for more FDI attraction as a goal for Burundi economic growth.展开更多
The recent economic and financial hardship has resuscitated controversies over the role of Foreign Capital in economic growth and welfare enhancement in emerging nations,particularly in Guinea.The literature tha...The recent economic and financial hardship has resuscitated controversies over the role of Foreign Capital in economic growth and welfare enhancement in emerging nations,particularly in Guinea.The literature that scrutinizes the causal interaction among FDI and poverty alleviation is relatively abundant,the fundamental statement shared by these empirical studies is that GDP growth is assumed to be relevant proxy of people well-being.However,Guinea and its FDI attraction policies have not been well approached by some of these paper.This empirical study examines the interaction between FDI inflows and poverty alleviation in Guinea from 1990 to 2017.The Human Development Index(HDI)and the per capita FDI net inflows are respectively employed as key welfare and FDI indicators.The findings from the Error Correction Model(ECM)confirm that,in the long term the variables converge in the same direction.The outcomes also exhibit that per capita FDI in the long run,negatively impacts welfare but not significantly,while Inflation’s coefficient remains positive and significant.With trade openness,we still found the same positive interaction but not significant.The results from the Auto Regressive Distributed Lag Model(ARDL)exhibit that per capita FDI flows[current value and L2.]have positive but not significant impact on HDI whereas FDI[L1]has a negative interaction with welfare at 10%significance level.The trade openness variable[current value]is negatively but not significantly associated with HDI,while inflation[L1 and L2]influence on human advancement is positive and significant.Overall,Foreign direct investment in Guinea is still resource seeking investment which impact on the domestic economy is very limited.Hence,government should introduce new policies and incentives in order to attract more market seeking or other types of FDI that may promote inclusive growth and alleviate poverty.展开更多
文摘This study analyzes how Foreign Direct Investment affects the rate of economic development among nations in the EAC with the empirical evidence of Burundi.The paper indicates that there is a link between foreign direct investment(FDI),gross domestic product(GDP),human capital,and openness with support of yearly time-series data from 1989 to 2017.The results from the Vector Error Correction Model(VECM)analysis technics discover that all the variables in long-term they move together.The findings also discovered that there is short-term causality running from GDP and human capital to FDI and no short-run causality found from openness to FDI as a result of Burundi’s policies that do not implement market seeker FDI.For VECM validation,the paper went through some post estimation diagnostic tests such as Lagrange multiplier tests and Jarque-Bera test,the results did not indicate any autocorrelation among the variables as the residuals were normally distributed.Openness being an important factor to attracting foreign investors,it is very crucial for Burundi to revise its trade policies and encourage a conducive environment that promotes foreign investment penetration by promoting and encouraging both domestic and foreign investors and keep improving human capital for more FDI attraction as a goal for Burundi economic growth.
文摘The recent economic and financial hardship has resuscitated controversies over the role of Foreign Capital in economic growth and welfare enhancement in emerging nations,particularly in Guinea.The literature that scrutinizes the causal interaction among FDI and poverty alleviation is relatively abundant,the fundamental statement shared by these empirical studies is that GDP growth is assumed to be relevant proxy of people well-being.However,Guinea and its FDI attraction policies have not been well approached by some of these paper.This empirical study examines the interaction between FDI inflows and poverty alleviation in Guinea from 1990 to 2017.The Human Development Index(HDI)and the per capita FDI net inflows are respectively employed as key welfare and FDI indicators.The findings from the Error Correction Model(ECM)confirm that,in the long term the variables converge in the same direction.The outcomes also exhibit that per capita FDI in the long run,negatively impacts welfare but not significantly,while Inflation’s coefficient remains positive and significant.With trade openness,we still found the same positive interaction but not significant.The results from the Auto Regressive Distributed Lag Model(ARDL)exhibit that per capita FDI flows[current value and L2.]have positive but not significant impact on HDI whereas FDI[L1]has a negative interaction with welfare at 10%significance level.The trade openness variable[current value]is negatively but not significantly associated with HDI,while inflation[L1 and L2]influence on human advancement is positive and significant.Overall,Foreign direct investment in Guinea is still resource seeking investment which impact on the domestic economy is very limited.Hence,government should introduce new policies and incentives in order to attract more market seeking or other types of FDI that may promote inclusive growth and alleviate poverty.