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Foreign Direct Investment, Exports and Economic Growth in SIDS: Evidence from Saint Lucia

Author

Listed:
  • HOSEIN, Roger

    (Department of Economics, The University of the West Indies, St. Augustine, Trinidad and Tobago)

  • DEONANAN, Regan

    (Department of Economics, The University of the West Indies, St. Augustine, Trinidad and Tobago)

  • EVANS, Kimbert

    (Department of Economics, The University of the West Indies, St. Augustine, Trinidad and Tobago)

Abstract

This paper examines the causal relationships among FDI, exports, and GDP in SIDS using data for Saint Lucia over the period 1980-2015. Using the ARDL bounds test approach to assess cointegration, results indicate that the variables share a long-run relationship when GDP and FDI are the dependent variables. Employing the Toda-Yamamoto test to assess long-run causal linkages, results indicate bi-directional causality between GDP and FDI, unidirectional causality from exports to GDP, and, unidirectional causality from FDI to exports. Accordingly, this paper finds evidence of export led-growth and FDI-led growth in Saint Lucia. These findings suggest that Saint Lucia should continue policies aimed at attracting FDI and expanding the export sector to promote economic growth. Additionally, policies which can diversify the types of FDI that Saint Lucia is currently attracting may be important in promoting exports and spurring higher levels of export led-growth and FDI-led growth. This study has implications for Eastern Caribbean countries and SIDS in other regions. Investimenti diretti esteri, export e crescita economica nei SIDS: evidenze da Santa Lucia Questo lavoro esamina la relazione causale tra investimenti diretti esteri, esportazioni e crescita economica nelle piccole isole in via di sviluppo utilizzando dati relativi all’isola di Santa Lucia nel periodo 1980-2015. I risultati dei bound test ARDL effettuati per valutare la cointegrazione indicano che le variabili hanno una relazione di lungo periodo quando il PIL e gli investimenti diretti esteri sono considerati variabili dipendenti. I risultati del test Toda-Yamamoto per valutare le relazioni causali di lungo periodo indicano che c’è una causalità bi-direzionale tra il PIL e gli investimenti diretti esteri, una causalità uni-direzionale tra le esportazioni e il PIL e tra gli investimenti diretti esteri e le esportazioni. Di conseguenza vi sono evidenze di una crescita export-led e FDI-led a Santa Lucia. Conformemente a ciò a Santa Lucia dovrebbero continuare ad adottarsi politiche finalizzate ad attrarre investimenti diretti esteri e ad aumentare le esportazioni per promuovere la crescita economica. Inoltre, sarebbe opportuno diversificare gli investimenti diretti esteri che Santa Lucia effettivamente potrebbe attrarre al fine di promuovere le esportazioni e i livelli di crescita export-led e FDI-led. I suggerimenti scaturiti da questo studio valgono sia per i paesi est-caraibici che per altre economie di piccole isole.

Suggested Citation

  • HOSEIN, Roger & DEONANAN, Regan & EVANS, Kimbert, 2019. "Foreign Direct Investment, Exports and Economic Growth in SIDS: Evidence from Saint Lucia," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 72(1), pages 47-76.
    • Handle: RePEc:ris:ecoint:0840
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    References listed on IDEAS

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    1. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    2. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    3. Chemeda, Faye Ensermu, 2001. "The Role Of Exports In Economic Growth With Reference To Ethiopian Country," 2001 Annual meeting, August 5-8, Chicago, IL 20569, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Cited by:

    1. Saba, Charles S., 2023. "Investigation of Telecommunication Infrastructures-Industrialisation-Growth Nexus: Evidence from Disaggregated Panel Data Analysis," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 76(2), pages 209-264.
    2. Hosein, Roger & Satnarine-Singh, Nirvana & Saridakis, George, 2022. "The Spillover Effect of Exports: An Analysis of Caribbean SIDs," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 75(1), pages 1-28.
    3. Iorngurum, Tersoo, 2022. "Foreign Direct Investment, Growth, and Publication Bias in Latin America and the Caribbean," MPRA Paper 112084, University Library of Munich, Germany.

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    More about this item

    Keywords

    ARDL; Exports; FDI; GDP; Saint Lucia; SIDS; Toda-Yamamoto;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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