A Panel Cointegration Analysis of the Effect of Foreign Direct Investment on Economic Growth: A Generalized Method of Moment (GMM) Estimation approach.

Authors

  • Stephany Abokzele Adongo University for Development Studies,Box 1350, Tamale, Ghana

DOI:

https://doi.org/10.31755/ajmbf/2022.2.1

Keywords:

capital, foreign direct investment, growth effects, labor, panel GMM, productivity

Abstract

This study employs a Generalized Method of Moment (GMM) estimator to examine the relationship
between foreign direct investment (FDI) and economic growth for using a global sample of 112 countries.
The sample of countries for the study was divided into three categories: less developed countries, medium
developed countries and more developed countries. Effects on productivity growth, capital and labor inputs
as well as innovation activities are distinguished. Furthermore, less and more developed countries as well
as the time periods 1973-1994 and 1995-2015are studied separately. Effects of FDI on production
capacities are found for more developed countries in the first time period, while effects on innovation
activities are found for the medium developed countries in the latter time period. Effects in less developed
countries are rather negative.

Published

2022-02-20