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Inward Foreign Direct Investment and Welfare Nexus: The Impact of Foreign Direct Investment on Welfare in Developing Countries

Author

Listed:
  • Md. Shakib Hossain

    (Department of Business Administration, East West University, Dhaka, Bangladesh,)

  • Md. Shahin Kamal

    (Senior Principal Officer, Arab Bangladesh Bank, Bangladesh)

  • Md. Rubaeth Halim

    (Finance and Controlling Specialist, DHL Global Forwarding (Bangladesh) Ltd., Dhaka, Bangladesh,)

  • Nurul Mohammad Zayed

    (Department of Real Estate, Faculty of Business and Entrepreneurship, Daffodil International University, Dhaka, Bangladesh)

Abstract

It is an attempt to estimate the consequence on welfare because of foreign direct investment (FDI) in different developing countries, mainly incorporated with the panel data having 79 countries producing over 1,343 observations from 1998 to 2014. Panel unit root test, panel cointegration, vector error correction model, panel dynamic least squares, fully modified least square method, fixed effect model and random effect model have used for determining the consequence on welfare due to FDI. According to the vector error correction model, it interprets that there is a long run causality of the variables such as FDI, agglomeration, debt, governance, inflation, infrastructure, openness, bureaucracy and country risk with the welfare. Concentrating on panel dynamic least squares and fully modified least square method that interprets if the FDI goes up by 1 unit the welfare goes up 0.286751 and 0.227956 respectively and from the both fixed effect model and random effect model elucidate that FDI is a significant variable to explain the welfare.

Suggested Citation

  • Md. Shakib Hossain & Md. Shahin Kamal & Md. Rubaeth Halim & Nurul Mohammad Zayed, 2019. "Inward Foreign Direct Investment and Welfare Nexus: The Impact of Foreign Direct Investment on Welfare in Developing Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 228-240.
    • Handle: RePEc:eco:journ1:2019-04-26
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    References listed on IDEAS

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    More about this item

    Keywords

    Panel unit root test; panel cointegration; vector error correction model; foreign direct investment;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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