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FDI, banking crises and growth: direct and spill over effects

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  • Brahim Gaies
  • Stéphane Goutte
  • Khaled Guesmi

Abstract

This study suggests a new decomposition of the effect of foreign direct investment (FDI) on the long-term growth of developing countries. It reveals that FDI not only has a direct positive effect on growth, but also increases it by reducing the recessionary effect resulting from a banking crisis. However, these advantages are conditioned by the FDI threshold, which in turn depends on the ‘absorption capacity’ of the host country.

Suggested Citation

  • Brahim Gaies & Stéphane Goutte & Khaled Guesmi, 2019. "FDI, banking crises and growth: direct and spill over effects," Applied Economics Letters, Taylor & Francis Journals, vol. 26(20), pages 1655-1658, November.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:20:p:1655-1658
    DOI: 10.1080/13504851.2019.1591587
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    Cited by:

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    2. Dong, Kangyin & Shahbaz, Muhammad & Zhao, Jun, 2022. "How do pollution fees affect environmental quality in China?," Energy Policy, Elsevier, vol. 160(C).
    3. Gaies, Brahim & Goutte, Stéphane & Guesmi, Khaled, 2020. "Does financial globalization still spur growth in emerging and developing countries? Considering exchange rates," Research in International Business and Finance, Elsevier, vol. 52(C).
    4. Kingsley Ikechukwu Okere & Obumneke Bob Muoneke & Favour Chidinma Onuoha & Philip C. Omoke, 2022. "Tripartite relationship between FDI, trade openness and economic growth amidst global economic crisis in Nigeria: application of combined cointegration and augmented ARDL analysis," Future Business Journal, Springer, vol. 8(1), pages 1-23, December.
    5. Brahim Gaies & Stéphane Goutte & Khaled Guesmi, 2019. "Does Financial Globalization Still Spur Growth In Developing Countries? Considering Exchange Rate Volatility," Working Papers halshs-02175361, HAL.
    6. Rowland Tochukwu Obiakor & Kingsley Ikechukwu Okere & Obumneke Bob Muoneke & Nnamdi Chinwendu Nwaeze, 2022. "Accounting for the symmetric and asymmetric effects of FDI-growth nexus amidst financial crises, economic crises and COVID-19 pandemic: application of hidden co-integration," Future Business Journal, Springer, vol. 8(1), pages 1-15, December.

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    More about this item

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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