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

• Main Author: Cyril A. Ogbokor
• Format: Article
• Language: English
• Published: Social Sciences Research Society 2018-01-01
• Series: International Journal of Economics and Finance Studies
• Online Access: http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/IJEF_2018_1/c-ogbokor.pdf

Capital movements,whether in the form of foreign direct investment or foreignportfolio investment are considered to have a positive multiplier effect on theeconomy.The study contributes to the empirical literature by investigatingwhether foreign direct investment affects economic growth using Namibia as atest centre.The study made use ofvector autoregression methodto examine thisrelationship.A quarterly data covering 1990:Q1 to 2014:Q4 was employed.Theresults found cointegratingrelationships among the four variables that wereinvestigated. The estimated long-run equation also suggests a positive relationshipamongst the variables that have been examined in the study. Surprisingly, noevidence of causality was found pertaining tothe variables assessed in the study.Moreover, real exchange rate and net foreign direct investment contributed moretowards innovations in economic growth during the forecast horizon compared tothe openness index. The study concludes by crafting opportunities for furtherinquiries.