FOREIGN DIRECT INVESTMENT AND ECONOMIC PROGRESS: APPLICATION OF A DYNAMIC MODEL

Yıl 2018, Cilt: 10 Sayı: 1, 1 - 15, 01.01.2018

Cyril A. Ogbokor

Öz

Capital movements, whether in the form of foreign direct investment or foreign
portfolio investment are considered to have a positive multiplier effect on the
economy. The study contributes to the empirical literature by investigating
whether foreign direct investment affects economic growth using Namibia as a
test centre. The study made use of vector autoregression method to examine this
relationship. A quarterly data covering 1990:Q1 to 2014:Q4 was employed. The
results found cointegrating relationships among the four variables that were
investigated. The estimated long-run equation also suggests a positive relationship
amongst the variables that have been examined in the study. Surprisingly, no
evidence of causality was found pertaining to the variables assessed in the study.
Moreover, real exchange rate and net foreign direct investment contributed more
towards innovations in economic growth during the forecast horizon compared to
the openness index. The study concludes by crafting opportunities for further
inquiries

Anahtar Kelimeler

Trade, growth, cointegration, empirical, developing countries, Namibia