Financial Development: A Pre-Condition for Foreign Direct Spillover Effects in Egypt
The paper investigates the hypothesis that financial development is the leading channel through which the foreign direct investment (FDI) positive spillovers accelerate growth rate. A simultaneous equations model (SEM) was specified using quarterly data within period (1993-2005). The estimated model evidenced a unidirectional causality from economic growth towards FDI. However, the reverse equations traced the indirect impact of the FDI on economic growth through its dualistic influence on both the financial sector as well as domestic investment. Therefore, further financial liberalization is highly recommended if and only if the planned institutional and regulatory reforms are politically supported. Then, financial derivatives were proposed as a part of the liberalization scenario from one side and as a tool towards managing risks in the Egyptian financial market from the other side.
|Date of creation:||Jul 2008|
|Contact details of provider:|| Web page: http://mgt.guc.edu.eg/economics/RePEc/guc/|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- de Mello, Luiz R, Jr, 1999.
"Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data,"
Oxford Economic Papers,
Oxford University Press, vol. 51(1), pages 133-151, January.
- L.R. de Mello Jr., 1996. "Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data," Studies in Economics 9615, School of Economics, University of Kent.
- Peter L. Rousseau & Paul Wachtel, 2005.
"Economic Growth and Financial Depth: Is the Relationship Extinct Already?,"
05-15, New York University, Leonard N. Stern School of Business, Department of Economics.
- Paul Wachtel & Peter L. Rousseau, 2010. "Economic Growth and Financial Depth: Is the Relationship Extinct Already?," Working Papers id:3225, eSocialSciences.
- Rousseau, Peter L. & Wachtel, Paul, 2005. "Economic Growth and Financial Depth: Is the Relationship Extinct Already?," WIDER Working Paper Series DP2005/10, World Institute for Development Economic Research (UNU-WIDER).
- Assaf Razin, 2004. "The Contribution of FDI Flows to Domestic Investment in Capacity, and Vice Versa," NBER Chapters, in: Growth and Productivity in East Asia, NBER-East Asia Seminar on Economics, Volume 13, pages 149-176 National Bureau of Economic Research, Inc.
- King, Robert G.*Levine, Ross, 1993.
"Finance and growth : Schumpeter might be right,"
Policy Research Working Paper Series
1083, The World Bank.
- Ross Levine & Sara Zervos, "undated".
"Stock markets, banks and economic growth ,"
CERF Discussion Paper Series
95-11, Economics and Finance Section, School of Social Sciences, Brunel University.
- Miao Wang, 2009. "Manufacturing FDI and economic growth: evidence from Asian economies," Applied Economics, Taylor & Francis Journals, vol. 41(8), pages 991-1002.
- Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
- Rajan, Raghuram G & Zingales, Luigi, 1998.
"Financial Dependence and Growth,"
American Economic Review,
American Economic Association, vol. 88(3), pages 559-586, June.
- Raghuram G. Rajan & Luigi Zingales, "undated". "Financial Dependence and Growth," CRSP working papers 344, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Raghuram G. Rajan & Luigi Zingales, 1996. "Financial Dependence and Growth," NBER Working Papers 5758, National Bureau of Economic Research, Inc.
- Geert Bekaert & Campbell R. Harvey & Christian Lundblad, 2004.
"Does Financial Liberalization Spur Growth?,"
Working Paper Research
53, National Bank of Belgium.
- Ross Levine, 2004.
"Finance and Growth: Theory and Evidence,"
NBER Working Papers
10766, National Bureau of Economic Research, Inc.
- Levine, Ross & Loayza, Norman & Beck, Thorsten, 2000.
"Financial intermediation and growth: Causality and causes,"
Journal of Monetary Economics,
Elsevier, vol. 46(1), pages 31-77, August.
- Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084 Central Bank of Chile.
- Thorsten Beck & Ross Levine & Norman Loayza, 1999. "Financial Intermediation and Growth: Causality and Causes," Working Papers Central Bank of Chile 56, Central Bank of Chile.
- Levine, Ross & Loayza, Norman & Beck, Thorsten, 1999. "Financial intermediation and growth : Causality and causes," Policy Research Working Paper Series 2059, The World Bank.
- Rioja, Felix & Valev, Neven, 2004. "Does one size fit all?: a reexamination of the finance and growth relationship," Journal of Development Economics, Elsevier, vol. 74(2), pages 429-447, August.
- Léonce Ndikumana, 2003.
"Financial Development, Financial Structure, and Domestic Investment: International Evidence,"
UMASS Amherst Economics Working Papers
2003-01, University of Massachusetts Amherst, Department of Economics.
- Ndikumana, Leonce, 2005. "Financial development, financial structure, and domestic investment: International evidence," Journal of International Money and Finance, Elsevier, vol. 24(4), pages 651-673, June.
- Léonce Ndikumana, 2003. "Financial Development, Financial Structure and Domestic Investment: International Evidence," Working Papers wp16, Political Economy Research Institute, University of Massachusetts at Amherst.
- Reisen, Helmut & Soto, Marcelo, 2001. "Which Types of Capital Inflows Foster Developing-Country Growth?," International Finance, Wiley Blackwell, vol. 4(1), pages 1-14, Spring.
- Xiaohui Liu & Peter Burridge & P. J. N. Sinclair, 2002. "Relationships between economic growth, foreign direct investment and trade: evidence from China," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1433-1440.
- Jung, Woo S, 1986. "Financial Development and Economic Growth: International Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 34(2), pages 333-346, January.
- Felipe, J., 1997.
"Total Factor Productivity Growth in East Asia: A Critical Survey,"
65, Asian Development Bank.
- Jesus Felipe, 1999. "Total factor productivity growth in East Asia: A critical survey," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 1-41.
- Niels Hermes & Robert Lensink, 2003.
"Foreign direct investment, financial development and economic growth,"
Journal of Development Studies,
Taylor & Francis Journals, vol. 40(1), pages 142-163.
- Hermes, Niels & Lensink, Robert, 2000. "Foreign direct investment, financial development and economic growth," Research Report 00E27, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Barry P. Bosworth & Susan M. Collins, 1999. "Capital Flows to Developing Economies: Implications for Saving and Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(1), pages 143-180.
- Blough, Stephen R, 1992. "The Relationship between Power and Level for Generic Unit Root Tests in Finite Samples," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(3), pages 295-308, July-Sept.
- Ghosh Roy Atrayee & Van den Berg Hendrik F, 2006. "Foreign Direct Investment and Economic Growth: A Time-Series Approach," Global Economy Journal, De Gruyter, vol. 6(1), pages 1-21, February.
- Ayhan Kose & Eswar S Prasad & Kenneth Rogoff & Shang-Jin Wei, 2006. "Financial Globalization; A Reappraisal," IMF Working Papers 06/189, International Monetary Fund.
- Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995.
"How Does Foreign Direct Investment Affect Economic Growth?,"
NBER Working Papers
5057, National Bureau of Economic Research, Inc.
- 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.
- Blomström, Magnus & Lipsey, Robert E & Zejan, Mario, 1993.
"Is Fixed Investment the Key to Economic Growth?,"
CEPR Discussion Papers
870, C.E.P.R. Discussion Papers.
- Luiz de Mello, 1997. "Foreign direct investment in developing countries and growth: A selective survey," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 1-34.
- 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.
- Verikios, George & Zhang, Xiao-guang, 2003. "Liberalising Trade in Financial Services: Global and Regional Economic Effects," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 307-335.
When requesting a correction, please mention this item's handle: RePEc:guc:wpaper:12. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lobna Sameer)
If references are entirely missing, you can add them using this form.