International Journal of Business and Management Review (IJBMR)

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The Impact Of Foreign Direct Investment on Economic Growth of West African Member State’s (A Case Study Of Ecowas) (2001 – 2015) (Published)

Economic Community of West African States (ECOWAS) has been programmed to fuel economic growth of all its member nations not only through trade liberalization and common customs union but through attracting FDI inflow as well. Since its inception, it has been undergoing a series of institutional reforms to achieve its stated objectives. Against this background, this research investigates the relationship between foreign direct investment and economic growth in the Economic Community of West African States (ECOWAS). This study shall use panel data spanning 2001 to 2015. In order to achieve this, the study shall conduct empirical analyses by panel unit root, heterogeneous panel co-integration, and SUR multiple regression. Research findings from Pedroni co-integration test show that there is a cognate relationship between all the factors under investigation concerning ECOWAS region. Co-integration analysis also indicates a positive and significant relationship between variables such as financial development, FDI, domestic trade, and trade openness, while unemployment and social unrest negatively relates to economic growth, though unemployment is not statistically significant. For the sake of caution, this study uses a SUR multiple regression for the robustness test. Empirical result shows FDI strongly relates to economic growth in ECOWAS nation. The results are in consonance with the previous theories on growth-FDI modeling. The research findings suggest that ECOWAS members should provide a conducive and enabling environment to attract a free flow of FDI into their economy.

Keywords: Ecowas, FDI, Heterogeneous panel cointegration, SUR Multiple Regression., economic growth


Foreign Direct Investment (FDI) plays a crucial role in speeding up the development and economic growth of a country. In developing countries rely on FDI to promote their economy as they face capital shortage for their development process. The strong growth performances experienced by Pakistan economy greatly depends on the FDI. FDI generates economic growth by increasing capital formation through the expansion of production capacity, promotion of export and creation of employment in Pakistan. FDI inflows of Pakistan started fluctuating from 1990s to 2012 and this high volatility of Pakistan FDI inflows drew the researchers’ attention to examine the factors affecting FDI inflows in Pakistan by using the annual data from year 1988-2012. Multiple linear regressions model is applied to study the relationship between explanatory variables and explained variable. Empirical results show that gross capital formation, exports, gross national income, have significantly and positively affect Pakistan FDI inflows. Other than that, external debt also significantly affects Pakistan FDI inflows but its relation with FDI is negative. Imports of Pakistan are the final goods & its relationship with the FDI inflow in Pakistan is negative. It is significant affect on FDI in Pakistan. Due to the war conditions in Pakistan the military expenditures increases sharply which shows the foreign investors disinterest in Pakistan from last few years and our results also shows a significant and negative relationship between military expenditures and FDI inflow in Pakistan.


An Analysis of the Life Cycle of Foreign Affiliates in a Small Open Economy: The Case of Greece 1960-2010 (Published)

The intellectual aspiration of the paper is to highlight the evolution of MNE activity in the Greek economy during the 1960-2010 period, using as intellectual analytical tools theories of FDI such as the Investment Development Path and New Institutional Economics apparatus. By imposing a time dichotomy in two sub-periods (1960-1980) and (1981-2010) we point out that in the first period, the economic environment was characterized by low wages, trade protection with tariffs and quotas, thus this period is the period of protectionism. During this early period, foreign MNEs had penetrated the Greek market with resource seeking (RS) and tariff-jumping (TJ) affiliates.

In the second period, which is the period of integration, the economic traits have changed. Thus infrastructure has been improved, wages have risen, trade barriers were gradually perished, and Greek firms started to engage in advertising and marketing and created their own branded products. This period has three sub-periods (1981-1990, 1991-2000, 2001-2010). During these sub-periods foreign MNEs, gradually but steadily reduce the number of RS and TJ affiliates and replace them with new market seeking (NMS) Greenfield affiliates stemmed from TJ units and acquisitions. We also highlight, that throughout the period although the total volume of FDI increased in absolute numbers, in relative terms (i.e. viz. a viz. other states), Greece failed to attract massive FDI inflows for a variety of reasons. Thus this research is associated with the evolution of FDI in a small open economy, its specific forms and with the survival of foreign plants. We have applied descriptive statistical methods and we have found out that in the 1960-2010 period foreign investments in Greece have been transformed. Thus in the early period (1960-1980) foreign MNEs prefer to engage in resource-seeking and tariff jumping investments, where as in the second period (1981-2010) foreign multinationals invest in new market seeking Greenfield affiliates. These results for the case of the Greek economy are reported for the first time. Furthermore, these results can be used as a specific case study of the evolution of a small and increasingly integrated open economy.


Keywords: Business History, FDI, Greece, Multinational Enterprises

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