Foreign direct investment and economic growth in developing countries: The role of international trade and foreign debt

Simon Epor, Henry Yua () and Paul Terhemba Iorember ()

Modern Finance, 2024, vol. 2, issue 1, 1-17

Abstract: The existing literature is sparse on the role of international finance in modeling the FDI-growth nexus. This study integrates the role of international trade and external debt in the FDI-economic growth nexus for Brazil, Nigeria, and Vietnam. We apply the Autoregressive Distributed Lag (ARDL) model to annual data covering the period 1990-2021. The results show that FDI and trade have positive but insignificant effects on economic growth in all three countries. In addition, our results show that external debt hampers long-term economic growth in these countries. Based on the results, we propose country-specific recommendations that take into account specific economic and financial conditions, global market dynamics, and the long-term development goals of developing countries.

Keywords: foreign direct investment; trade openness; external debt; economic growth; developing countries; external finance; ARDL; autoregressive distributed lag model (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bdy:modfin:v:2:y:2024:i:1:p:1-17:id:87

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