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Can a change in FDI accelerate GDP growth? Time-series and ANNs evidence on Malta

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  • Magazzino, Cosimo
  • Mele, Marco

Abstract

This paper aims to examine the relationship between FDI and economic growth in Malta over the years 1971–2017. Unit root and stationarity tests reveal that FDI is stationary, while real GDP, trade, and manufacturing are integrated of order 1. The results of causality tests show that the neutrality hypothesis holds, given the fact that any statistically significant causal relation emerges between FDI and economic growth. Moreover, robustness checks used a new Artificial Neural Networks (ANNs) algorithm. This procedure is able to predict the change in FDI concerning Maltese economic growth. Relevant policy suggestions emerged with empirical results.

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  • Magazzino, Cosimo & Mele, Marco, 2022. "Can a change in FDI accelerate GDP growth? Time-series and ANNs evidence on Malta," The Journal of Economic Asymmetries, Elsevier, vol. 25(C).
    • Handle: RePEc:eee:joecas:v:25:y:2022:i:c:s1703494922000044
    DOI: 10.1016/j.jeca.2022.e00243
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    More about this item

    Keywords

    Economic development; Foreign direct investments; Trade; Time-series; Artificial neural networks; Malta;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • 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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