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Are Technological Innovation and Foreign Direct Investment a Way to Boost Economic Growth? An Egyptian Case Study Using the Autoregressive Distributed Lag (ARDL) Model

Author

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  • Maha Mohamed Alsebai Mohamed

    (School of Economics, Wuhan University of Technology, Luoshi Road 122, Wuhan 430070, China
    Department of Economic, Faculty of Commerce, Benha University, Benha 13511, Egypt)

  • Pingfeng Liu

    (School of Economics, Wuhan University of Technology, Luoshi Road 122, Wuhan 430070, China)

  • Guihua Nie

    (School of Economics, Wuhan University of Technology, Luoshi Road 122, Wuhan 430070, China)

Abstract

Both technological innovation and foreign direct investment have received widespread attention in the literature on their role in promoting economic growth. Therefore, this study aims to test the relationship between foreign direct investment, technological innovation, and economic growth of the Egyptian economy during the period between 1990–2019 using the autoregressive distributed lag model simultaneous integration test. Our findings show of the ARDL (Autoregressive Distributed Lag) model estimation a joint complementary relationship between the rate of growth of per capita gross domestic product (GDP) in US dollars and the independent variables in the model in the long and short term, which are statistically significant results. We found a positive significant relationship between the variables of incoming foreign direct investment and share of total capital formation in economic growth. Therefore, in the long term, the rate of inflation and the innovation index had a negative impact in the long term and the speed of adjustment towards equilibrium was very large, as it was estimated at 1.5 years (1/0.651). Furthermore, the study also provides valuable lessons and a strategic vision for the Egyptian government, which aspires to advance technology and attract more foreign direct investment.

Suggested Citation

  • Maha Mohamed Alsebai Mohamed & Pingfeng Liu & Guihua Nie, 2021. "Are Technological Innovation and Foreign Direct Investment a Way to Boost Economic Growth? An Egyptian Case Study Using the Autoregressive Distributed Lag (ARDL) Model," Sustainability, MDPI, vol. 13(6), pages 1-28, March.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:6:p:3265-:d:517813
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    2. Preethu Rahman & Zhihe Zhang & Mohammad Musa, 2023. "Do technological innovation, foreign investment, trade and human capital have a symmetric effect on economic growth? Novel dynamic ARDL simulation study on Bangladesh," Economic Change and Restructuring, Springer, vol. 56(2), pages 1327-1366, April.
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