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Foreign Capital Inflows and Economic Growth of Iran

Author

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  • Mowlaei , Mohammad

    (Department of Economics, Bu-Ali Sina University)

Abstract

Nowadays, Foreign Capital Inflows (FCIs) are considered as a catalyst for economic development and an important source of transferring technology and foreign exchange earnings from developed to developing countries. The purpose of this paper is to estimate the impact of FCIs (which include foreign direct investment, personal remittances and official development investment) on economic growth in Iran. An Autoregressive Distributed Lag (ARDL) approach is used over the period 1992-2016. The results indicate that all the three of foreign capital inflows have positive and significant impacts on economic growth in the short-run and long-run. However, Foregin Direct Investment (FDI) and Public Relations (PR) have more effects than Official Development Assistant (ODA) on economic growth of Iran. The study suggests the design and implementation of appropriate fiscal, monetary and trade policies to complement the flow of foreign capital inflows to realize of its full impact on growth.

Suggested Citation

  • Mowlaei , Mohammad, 2017. "Foreign Capital Inflows and Economic Growth of Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(1), pages 37-54, January.
    • Handle: RePEc:mbr:jmonec:v:12:y:2017:i:1:p:37-54
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    More about this item

    Keywords

    Economic Growth; Foreign Direct Investment; Personal Remittances; Official Development Investment;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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