246
Views
0
CrossRef citations to date
0
Altmetric
Financial Economics

The impact of external debt and exchange rate on foreign direct investment in emerging investment markets: new evidence using a PMG-ARDL panel data analysis

ORCID Icon, ORCID Icon & ORCID Icon
Article: 2362780 | Received 18 Mar 2024, Accepted 25 May 2024, Published online: 23 Jun 2024

References

  • Abille, A. B., & Mumuni, S. (2023). Tax incentives, ease of doing business and inflows of FDI in Africa: Does governance matter? Cogent Economics & Finance, 11(1), 2164555. https://doi.org/10.1080/23322039.2022.2164555
  • Adewale, E. A., & Comfort, E. S. (2022). Nexus between Exchange Rate Fluctuation and Foreign Direct Investment in Nigeria. NEXUS, 5(2), 21–37.
  • Ahmed, F., Khan, L., Farooq, F., & Suleman, T. (2020). Impact of international trade and trade duties on current account balance of the balance of payment: A study of N-11 countries. Journal of Accounting and Finance in Emerging Economies, 6(1), 11–32. https://doi.org/10.26710/jafee.v6i1.1047
  • Ahmed, S., &Shaikh, S. A. (2024). Economic Growth Determinants in Pakistan: An Empirical Analysis Using ARDL Model. Qlantic Journal of Social Sciences and Humanities, 5(1), 162–175. https://doi.org/10.55737/qjssh.682525285
  • Albertus, J. F., Glover, B., & Levine, O. (2022). Foreign investment of US multinationals: The effect of tax policy and agency conflicts. Journal of Financial Economics, 144(1), 298–327. https://doi.org/10.1016/j.jfineco.2021.06.004
  • Alola, A. A., Bekun, F. V., & Sarkodie, S. A. (2019). Dynamic impact of trade policy, economic growth, fertility rate, renewable and non-renewable energy consumption on ecological footprint in Europe. Science of the Total Environment, 685, 702–709. https://doi.org/10.1016/j.scitotenv.2019.05.139
  • Ang, J. B. (2008). Determinants of foreign direct investment in Malaysia. Journal of Policy Modeling, 30(1), 185–189. https://doi.org/10.1016/j.jpolmod.2007.06.014
  • Arshad, Z., Robaina, M., & Botelho, A. (2020). Renewable and non-renewable energy, economic growth and natural resources impact on environmental quality: Empirical evidence from south and southeast asian countries with CS-ARDL modeling. International Journal of Energy Economics and Policy, 10(5), 368–383. https://doi.org/10.32479/ijeep.9956
  • Aslan, A., Altinoz, B., & Atay Polat, M. (2021). The nexus among climate change, economic growth, foreign direct investments, and financial development: New evidence from N‐11 countries. Environmental Progress & Sustainable Energy, 40(3), e13585. https://doi.org/10.1002/ep.13585
  • Attiaoui, I., Toumi, H., Ammouri, B., & Gargouri, I. (2017). Causality links among renewable energy consumption, CO2 emissions, and economic growth in Africa: Evidence from a panel ARDL-PMG approach. Environmental Science and Pollution Research, 24(14), 13036–13048. https://doi.org/10.1007/s11356-017-8850-7
  • Balıkçıoğlu, E., Dalgıç, B., & Fazlıoğlu, B. (2016). Does foreign capital increase tax revenue: The Turkish case. International Journal of Economics and Financial Issues, 6(2), 776–781.
  • Bénassy-Quéré, A., Fontagné, L., & Lahrèche-Révil, A. (2001). Exchange-rate strategies in the competition for attracting foreign direct investment. Journal of the Japanese and international Economies, 15(2), 178–198.
  • Bilawal, M., Ibrahim, M., Abbas, A., Shuaib, M., Ahmed, M., Hussain, I., & Fatima, T. (2014). Impact of exchange rate on foreign direct investment in Pakistan. Advances in Economics and Business, 2(6), 223–231. https://doi.org/10.13189/aeb.2014.020602
  • Busse, M., & Hefeker, C. (2007). Political risk, institutions and foreign direct investment. European Journal of Political Economy, 23(2), 397–415. https://doi.org/10.1016/j.ejpoleco.2006.02.003
  • Buthelezi, E. M. (2023). Exploring the relationship between exchange rate misalignment uncertainty and economic growth in South Africa. Cogent Economics & Finance, 11(2), 2267920. https://doi.org/10.1080/23322039.2023.2267920
  • Chaudhary, G. M., Shah, S. Z. A., & Bagram, M. M. M. (2012). Do exchange rate volatility effects foreign direct investment? Evidence from selected Asian economies. Journal of Basic and Applied Scientific Research, 2(4), 3670–3681.
  • Chettri, K. K., Bhattarai, J. K., & Gautam, R. (2022). Foreign direct investment and stock market development in Nepal. Asian Journal of Economics and Banking, 7(2), 277–292. https://doi.org/10.1108/AJEB-02-2022-0018
  • Chowdhury, T. S., Rahman, M. H., Majumder, S. C., & Esquivias, M. A. (2023). Significance of technological progress and capital formation to expand foreign direct investment in Bangladesh: Does money circulation matter? Cogent Economics & Finance, 11(2), 2279351. https://doi.org/10.1080/23322039.2023.2279351
  • Clements, B., & Nguyen, T. (2003). External debt, public investment and growth in low-income countries. IMF Working Paper No. 3(249).
  • De Mooij, R. A., & Ederveen, S. (2003). Taxation and foreign direct investment: a synthesis of empirical research. International Tax and Public Finance, 10, 673–693.
  • Desai, M. A., Foley, C. F., & Hines, J. R. Jr, (2004). Foreign direct investment in a world of multiple taxes. Journal of Public Economics, 88(12), 2727–2744. https://doi.org/10.1016/j.jpubeco.2003.08.004
  • Dhakal, D., Nag, R., Pradhan, G., & Upadhyaya, K. P. (2010). Exchange rate volatility and foreign direct investment: Evidence from East Asian countries. International Business & Economics Research Journal (IBER), 9(7), 121–128. https://doi.org/10.19030/iber.v9i7.603
  • Elahi, S. M., & Rahman, M. H. (2021). Remittance and inflation nexus in Bangladesh: Application of dynamic ARDL model with linear trend. Indonesian Journal of Business and Economics, 4(2), 611–622. https://doi.org/10.25134/ijbe.v4i2.4513
  • Erülgen, A., Rjoub, H., & Adalıer, A. (2020). Bank characteristics effect on capital structure: Evidence from PMG and CS-ARDL. Journal of Risk and Financial Management, 13(12), 310. https://doi.org/10.3390/jrfm13120310
  • Etim, R. S., Jeremiah, M. S., & Jeremiah, O. O. (2019). Attracting foreign direct investment (FDI) in Nigeria through effective tax policy incentives. International Journal of Applied Economics, Finance and Accounting, 4(2), 36–44. https://doi.org/10.33094/8.2017.2019.42.36.44
  • Fadl, N., & Ghoneim, H. (2020). Impact of foreign exchange rate on foreign direct investment: Egypt case. Revue du Lareiid, 6, 7.
  • Fahmi, M. R. (2012). Analyzing the relationship between tax holiday and foreign direct investment in Indonesia. Asia Pacific Studies Ritsumeikanasia Pacific University Japan.
  • Gresik, T. A. (2001). The taxing task of taxing transnationals. Journal of Economic Literature, 39(3), 800–838. https://doi.org/10.1257/jel.39.3.800
  • Haque, M. A., Biqiong, Z., Arshad, M. U., & Yasmin, N. (2022). Role of uncertainty for FDI inflow: Panel econometric analysis of selected high-income nations. Cogent Economics & Finance, 10(1), 2156677. https://doi.org/10.1080/23322039.2022.2156677
  • He, P., Zou, X., Qiao, Y., Chen, L., Wang, X., Luo, X., & Ning, J. (2019). Does the double dividend of environmental tax really play a role in OECD countries? A study based on the panel ARDL Model. Ekoloji, 28(107), 49–62.
  • Ibrahim, M. D., & Alola, A. A. (2020). Integrated analysis of energy-economic development-environmental sustainability nexus: Case study of MENA countries. Science of the Total Environment, 737, 139768. https://doi.org/10.1016/j.scitotenv.2020.139768
  • Jahan, N., & Paul, S. C. (2021). Determinants of FDI inflows to Next 11 countries: A panel data analysis. International Journal of Research in Business and Social Science (2147–4478), 10(6), 159–165.
  • Jamal, A., & Bhat, G. M. (2023). Disentangling the nexus between exchange rate volatility, exports, and FDI: Empirical evidence from the Indian economy. Global Journal of Emerging Market Economies, 15(3), 449–472. https://doi.org/10.1177/09749101221108788
  • Kao, C. (1999). Spurious regression and residual-based tests for cointegrating in panel data. Journal of Econometrics, 90(1), 1–44. https://doi.org/10.1016/S0304-4076(98)00023-2
  • Lee, J. W., & Brahmasrene, T. (2020). Exchange rate movements and structural break on China FDI inflows. Contemporary Economics, 14(2), 112–126. https://doi.org/10.5709/ce.1897-9254.335
  • Liu, W. (2010). Determinants of FDI inflows to China: An empirical analysis of source country characteristics. In Proceedings of the 2010 Taipei International Conference on Growth, Trade and Dynamics (pp. 1–18).
  • Louail, B., & Zouita, M. S. (2021). The relationship between foreign direct investment, financial development and growth economic in Next-11 Countries: A PMG/ARDL estimation. Management, 25(1), 28–50. https://doi.org/10.2478/manment-2019-0058
  • Mahmood, H., & Chaudhary, A. R. (2013). Impact of FDI on tax revenue in Pakistan. Pakistan Journal of Commerce and Social Sciences (PJCSS), 7(1), 59–69.
  • Majumder, S. C., & Rahman, M. H. (2020). Impact of foreign direct investment on economic growth of China after economic reform. Journal of Entrepreneurship, Business and Economics, 8(2), 120–153.
  • Majumder, S. C., Rahman, M. H., & Martial, A. A. A. (2022). The effects of foreign direct investment on export processing zones in Bangladesh using Generalized Method of Moments Approach. Social Sciences & Humanities Open, 6(1), 100277. https://doi.org/10.1016/j.ssaho.2022.100277
  • Mensah, I. A., Sun, M., Gao, C., Omari-Sasu, A. Y., Zhu, D., Ampimah, B. C., & Quarcoo, A. (2019). Analysis on the nexus of economic growth, fossil fuel energy consumption, CO2 emissions and oil price in Africa based on a PMG panel ARDL approach. Journal of Cleaner Production, 228, 161–174. https://doi.org/10.1016/j.jclepro.2019.04.281
  • Mwakabungu, B. H. P., & Kauangal, J. (2023). An empirical analysis of the relationship between FDI and economic growth in Tanzania. Cogent Economics & Finance, 11(1), 2204606. https://doi.org/10.1080/23322039.2023.2204606
  • Odabas, H. (2016). Foreign direct investment inflows on tax revenues in the transition economies of European Union. New Trends and Issues Proceedings on Humanities and Social Sciences, 2(2), 17–22. https://doi.org/10.18844/prosoc.v2i2.408
  • Olayungbo, D. O., & Quadri, A. (2019). Remittances, financial development and economic growth in sub-Saharan African countries: Evidence from a PMG-ARDL approach. Financial Innovation, 5(1), 1–25. https://doi.org/10.1186/s40854-019-0122-8
  • Onifade, S. T., Çevik, S., Erdoğan, S., Asongu, S., & Bekun, F. V. (2020). An empirical retrospect of the impacts of government expenditures on economic growth: New evidence from the Nigerian economy. Journal of Economic Structures, 9(1), 1–13. https://doi.org/10.1186/s40008-020-0186-7
  • Osinubi, T. S. (2002). Does stock market promote economic growth in Nigeria. The ICFAI Journal of Applied Finance, 10(3), 17–35.
  • Paul, S. C., Jahan, N., Hassan, M. M., & Mondal, T. (2021). Nexus between FDI and production indices: Evidence from Asian countries. Asian Journal of Empirical Research, 11(4), 33–40. https://doi.org/10.18488/journal.1007.2021.114.33.40
  • Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels. CESifo Working Paper Series No. 1229; IZA Discussion Paper No. 1240. Available at SSRN: http://ssrn.com/abstract=572504.
  • Pesaran, M. H., Shin, Y., & Smith, R. P. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American statistical Association, 94(446), 621–634.
  • Pradhan, J. P. (2011). Emerging multinationals: A comparison of Chinese and Indian outward foreign direct investment. Institutions and Economies, 3(1), 113–148.
  • Qamruzzaman, M., Karim, S., & Wei, J. (2019). Does asymmetric relation exist between exchange rate and foreign direct investment in Bangladesh? Evidence from nonlinear ARDL analysis. The Journal of Asian Finance, Economics and Business, 6(4), 115–128. https://doi.org/10.13106/jafeb.2019.vol6.no4.115
  • Rahman, M. H. (2023). Does the current account balance influence foreign direct investment in the Indian economy? Application of quantile regression model. SN Business & Economics, 3(5), 94. https://doi.org/10.1007/s43546-023-00471-y
  • Rahman, M. H., Chowdhury, M. A., & Akter, M. S. (2023a). Interaction of market size, inflation and trade openness on foreign direct investment inflows in India, China and Japan: Panel dynamic analysis. International Journal of Indian Culture and Business Management, 29(1), 45–64. https://doi.org/10.1504/IJICBM.2023.130963
  • Rahman, M. H., Voumik, L. C., Rahman, M. M., & Majumder, S. C. (2023b). Scrutinizing the existence of the environmental Kuznets curve in the context of foreign direct investment, trade, and renewable energy in Bangladesh: Impending from ARDL method. Environment, Development and Sustainability, 26, 12619–12638.
  • Robertson, D., & Symons, J. (2000). Factor residuals in SUR regressions: Estimating panels allowing for cross sectional correlation (No. 473). Centre for Economic Performance, London School of Economics and Political Science.
  • Senibi, V., Oduntan, E., Ayo, A., Makwal, I., & Eldad, M. (2017). Public debt, domestic investment and foreign direct investment in Nigeria: A structural var approach (1981–2015). International Journal of Innovative Research and Advanced Studies (IJIRAS), 4(6), 508–519.
  • Shapiro, D., & Globerman, S. (2003). Foreign investment policies and capital flows in Canada: A sectoral analysis. Journal of Business Research, 56(10), 779–790. https://doi.org/10.1016/S0148-2963(02)00466-6
  • Shiyalini, S., & Suresh, K. (2022). The impact of public debt on domestic and foreign direct investments in developing market: An ARDL bounds testing approach. Corporate Law and Governance Review, 4(1), 8–18. https://doi.org/10.22495/clgrv4i1p1
  • Ssali, M. W., Du, J., Mensah, I. A., & Hongo, D. O. (2019). Investigating the nexus among environmental pollution, economic growth, energy use, and foreign direct investment in 6 selected sub-Saharan African countries. Environmental Science and Pollution Research, 26(11), 11245–11260. https://doi.org/10.1007/s11356-019-04455-0
  • Sultanuzzaman, M. R., Fan, H., Akash, M., Wang, B., & Shakij, U. S. M. (2018). The role of FDI inflows and export on economic growth in Sri Lanka: An ARDL approach. Cogent Economics & Finance, 6(1), 1518116. https://doi.org/10.1080/23322039.2018.1518116
  • Voumik, L. C., Rahman, M. H., Rahman, M. M., Ridwan, M., Akter, S., & Raihan, A. (2023). Toward a sustainable future: Examining the interconnectedness among Foreign Direct Investment (FDI), urbanization, trade openness, economic growth, and energy usage in Australia. Regional Sustainability, 4(4), 405–415. https://doi.org/10.1016/j.regsus.2023.11.003
  • Wang, Y., Wang, Y., Zhou, J., Zhu, X., & Lu, G. (2011). Energy consumption and economic growth in China: A multivariate causality test. Energy Policy, 39(7), 4399–4406. https://doi.org/10.1016/j.enpol.2011.04.063
  • Warren, M., Seetanah, B., & Sookia, N. (2023). An investigation of exchange rate, exchange rate volatility and FDI nexus in a gravity model approach. International Review of Applied Economics, 37(4), 482–502. https://doi.org/10.1080/02692171.2023.2239719
  • Young, K. H. (1988). The effects of taxes and rates of return on foreign direct investment in the United States. National Tax Journal, 41(1), 109–121. https://doi.org/10.1086/NTJ41788713