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Economic growth, foreign direct investment and governance oscillation: Empirical evidence from SAARC economies (1996-2015)

Author

Listed:
  • Maryam NASIR

    (Department of Economics and Management Sciences, NED University of Engineering & Technology, Karachi, Pakistan)

  • Raza Ali KHAN

    (Department of Civil Engineering, NED University of Engineering & Technology, Karachi, Pakistan)

  • Maham FATIMA

    (NED University of Engineering & Technology, Karachi, Pakistan)

Abstract

Foreign direct investment (FDI) is considered one of the conventional determinants of economic growth. Economies aiming for sustainable development must focus on attracting FDI, which depends on factors such as market size, openness, resources, labor costs, productivity, growth rate, macroeconomic stability, and technology. Governance is also a key pre-determinant of FDI. This study investigates the impact of FDI inflows on economic growth via governance in SAARC economies using panel data from 1996–2015. GDP per capita growth is used as a proxy for economic growth, with FDI and governance data obtained from World Bank indicators. Results show that governance does not significantly mediate the effect of FDI inflows in SAARC economies, though institutional improvements are recommended to strengthen domestic financial markets.

Suggested Citation

  • Maryam NASIR & Raza Ali KHAN & Maham FATIMA, 2018. "Economic growth, foreign direct investment and governance oscillation: Empirical evidence from SAARC economies (1996-2015)," Journal of Economics Library, EconSciences Journals, vol. 5(2), pages 169-187, June.
    • Handle: RePEc:cvv:journ5:v:5:y:2018:i:2:p:169-187
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    JEL classification:

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

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