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Foreign direct investment and economic growth nexus in Zimbabwe: A cointegration approach

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  • Munyanyi, Musharavati Ephraim

Abstract

This paper seeks to examine the relationship between foreign direct investment and economic growth in Zimbabwe by applying an Autoregressive Distributed Lag (ARDL) cointegration approach on time series data stretching from 1975 to 2007. The short-and long-run relationship results show that foreign direct investment has a positive effect on economic growth and this confirms the proposition of economic theory and the result findings of the previous studies in this area. According to the study, the results imply that economic and investment policies which can attract more foreign investments be effectively drafted so as to stimulate economic growth. This also involves creating a stable economic and investment environment, improving infrastructure, and ensuring clarity and consistency of investment policies.

Suggested Citation

  • Munyanyi, Musharavati Ephraim, 2017. "Foreign direct investment and economic growth nexus in Zimbabwe: A cointegration approach," MPRA Paper 77946, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:77946
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    References listed on IDEAS

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    3. V.N. Balasubramanyam, 2008. "Foreign Direct Investment," Chapters, in: Amitava Krishna Dutt & Jaime Ros (ed.), International Handbook of Development Economics, Volumes 1 & 2, volume 0, chapter 39, Edward Elgar Publishing.
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    5. World Bank, 2016. "World Development Indicators 2016," World Bank Publications - Books, The World Bank Group, number 23969, December.
    6. Dr. Najia Saqib & Maryam Masnoon & Nabeel Rafique, 2013. "Impact of Foreign Direct Investment on Economic Growth of Pakistan," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 3(1), pages 1-3.
    7. Wu Jyun-Yi & Hsu Chih-Chiang, 2008. "Does Foreign Direct Investment Promote Economic Growth? Evidence from a Threshold Regression Analysis," Economics Bulletin, AccessEcon, vol. 15(12), pages 1-10.
    8. Jong Il Choe, 2003. "Do Foreign Direct Investment and Gross Domestic Investment Promote Economic Growth?," Review of Development Economics, Wiley Blackwell, vol. 7(1), pages 44-57, February.
    9. Durham, J.B.J. Benson, 2004. "Absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth," European Economic Review, Elsevier, vol. 48(2), pages 285-306, April.
    10. KH Zhang, 2001. "Does Foreign Direct Investment Promote Economic Growth? Evidence From East Asia And Latin America," Contemporary Economic Policy, Western Economic Association International, vol. 19(2), pages 175-185, April.
    11. L.R. de Mello Jr., 1996. "Foreign Direct Investment, International Knowledge Transfers, and Endogenous Growth: Time Series Evidence," Studies in Economics 9610, School of Economics, University of Kent.
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    Cited by:

    1. 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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    More about this item

    Keywords

    Economic Growth; Foreign Direct Investment; Cointegration; Autoregressive Distributed Lag (ARDL); Zimbabwe;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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