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Impact of Foreign Direct Investment on Economic Growth: Comparative Analysis in Ecuador, Peru and Colombia 1996-2016

Author

Listed:
  • Freddy R. Camacho

    (Universidad Cat lica de Santiago de Guayaquil, Guayaquil, Ecuador.)

  • Yanina S. Baja a

    (Universidad Cat lica de Santiago de Guayaquil, Guayaquil, Ecuador.)

Abstract

The present investigation has the purpose of evaluating whether there is a Granger causality relationship in the 1996-2016 historical trajectory between the study variables, Foreign Direct Investment (FDI) and economic growth of Ecuador, with its commercial partners Colombia and Peru; considering the importance that its implications could contribute to political-economic decisions. The analysis was performed taking data from Ecuador, Peru and Colombia with a temporal sample in the period 1996-2016 on a quarterly basis applying autoregressive vectors to determine the relationship between the mentioned variables. The results indicate that GDP does not cause FDI in any of the countries analyzed. However, in Ecuador and Peru FDI has a significant Granger-causality effect on GDP. A possible explanation for this last result may be that FDI has a non-linear effect on production. Both Ecuador and Peru have a low level of FDI over GDP in relation to Colombia.

Suggested Citation

  • Freddy R. Camacho & Yanina S. Baja a, 2020. "Impact of Foreign Direct Investment on Economic Growth: Comparative Analysis in Ecuador, Peru and Colombia 1996-2016," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 247-257.
    • Handle: RePEc:eco:journ1:2020-04-29
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    References listed on IDEAS

    as
    1. Bengoa, Marta & Sanchez-Robles, Blanca, 2003. "Foreign direct investment, economic freedom and growth: new evidence from Latin America," European Journal of Political Economy, Elsevier, vol. 19(3), pages 529-545, September.
    2. Barajas, Adolfo & Steiner, Roberto & Salazar, Natalia, 2000. "The impact of liberalization and foreign investment in Colombia's financial sector," Journal of Development Economics, Elsevier, vol. 63(1), pages 157-196, October.
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    Cited by:

    1. Nuria Ceular-Villamandos & Virginia Navajas-Romero & Lorena Caridad y López del Río & Lucia Zita Zambrano-Santos, 2021. "Workplace Situation and Well-Being of Ecuadorian Self-Employed," Sustainability, MDPI, vol. 13(4), pages 1-26, February.
    2. Segundo Camino-Mogro & Natalia Bermúdez-Barrezueta & Mary Armijos, 2023. "Is FDI a potential tool for boosting firm’s performance? Firm level evidence from Ecuador," Journal of Evolutionary Economics, Springer, vol. 33(2), pages 341-391, April.

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    More about this item

    Keywords

    Foreign Direct Investment; Gross Domestic Product; Economic Growth; Comparative;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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