Economic growth, foreign direct investment and governance oscillation: Empirical evidence from SAARC economies (1996-2015)

Maryam Nasir (), Raza Ali Khan () and Maham Fatima
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Maryam Nasir: Department of Economics and Management Sciences, NED University of Engineering & Technology, Karachi, Pakistan
Raza Ali Khan: Department of Civil Engineering, NED University of Engineering & Technology, Karachi, Pakistan
Maham Fatima: NED University of Engineering & Technology, Karachi, Pakistan

Journal of Economics Library, 2018, vol. 5, issue 2, 169-187

Abstract: Foreign direct investment (FDI) is considered one of the conventional determinants of economic growth. Economies aiming for sustainable development must focus on attracting FDI, which depends on factors such as market size, openness, resources, labor costs, productivity, growth rate, macroeconomic stability, and technology. Governance is also a key pre-determinant of FDI. This study investigates the impact of FDI inflows on economic growth via governance in SAARC economies using panel data from 1996–2015. GDP per capita growth is used as a proxy for economic growth, with FDI and governance data obtained from World Bank indicators. Results show that governance does not significantly mediate the effect of FDI inflows in SAARC economies, though institutional improvements are recommended to strengthen domestic financial markets.

Keywords: Foreign direct investment; Governance; Economic growth; Human capital; Gross capital formation (search for similar items in EconPapers)
JEL-codes: F21 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:cvv:journ5:v:5:y:2018:i:2:p:169-187

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