Authors:
Nurudeen Abu Universiti Utara Malaysia

Search for other papers by Nurudeen Abu in
Current site
Google Scholar
PubMed
Close
and
Mohd Zaini Abd Karim Universiti Utara Malaysia

Search for other papers by Mohd Zaini Abd Karim in
Current site
Google Scholar
PubMed
Close
Restricted access

Despite the large body of research on foreign direct investment, domestic savings, domestic investment and economic growth, little has been done to investigate the relationships among them. This paper examines the relationships among foreign direct investment, domestic savings, domestic investment, and economic growth in 16 Sub-Saharan African (SSA) countries from 1981 to 2011, using various techniques. The results of VAR estimation and Granger causality tests demonstrate that there is a unidirectional causality from foreign investment to growth and domestic investment, savings to growth, and a bidirectional causality between growth and domestic investment as well as savings and domestic investment. The results of the variance decomposition analysis reveal that foreign investment exerts more influence on growth. Savings are more important in explaining domestic investment, growth is more important in explaining foreign investment, and domestic investment is more important in explaining savings. Based on the results of the impulse response analysis, there is a positive unidirectional causality from foreign investment to growth and domestic investment, savings to growth, and a positive bidirectional causality between savings and domestic investment, both in the short and long-run. Although there is feedback causality between domestic investment and growth, the impact from investment is negative in the short-run and positive in the long-run. Thus, policies that encourage foreign investment and savings are required to boost domestic investment and promote growth, and policies that raise domestic investment will lead to higher savings and growth in SSA.

  • Abu, N. (2010): Saving-Economic Growth Nexus in Nigeria, 1970-2007: Granger Causality and Co-integration Analyses. Review of Economics and Business Studies 3(1): 93104.

    • Search Google Scholar
    • Export Citation
  • Abu, N.Wafure, O. G.Usman, A. (2010): On the Causal Links between Foreign Direct Investment and Economic Growth in Nigeria, 1970-2008: An Application of Granger Causality and Co-integration Techniques. Romanian Statistical Review 3.

    • Search Google Scholar
    • Export Citation
  • Adams, S. (2009): Can Foreign Direct Investment (FDI) Help to Promote Growth in Africa? African Journal of Business Management 3(5): 178183.

    • Search Google Scholar
    • Export Citation
  • Adelegan, J. O. (2000): Foreign Direct Investment and Economic Growth in Nigeria: A Seemingly Unrelated Model. African Review of Money Finance and Banking: 5–25.

    • Search Google Scholar
    • Export Citation
  • Agrawal, P. (2001): The Relationship between Savings and Growth: Cointegration and Causality Evidence from Asia. Applied Economics 33(4): 499513.

    • Search Google Scholar
    • Export Citation
  • Akinlo, A. E (2004): Foreign Direct Investment and Growth in Nigeria: An Empirical Investigation. Journal of Policy Modeling 26: 627639.

    • Search Google Scholar
    • Export Citation
  • Alfaro, L.Chanda, A.Kalemli-Ozcan, S.Sayek, S. (2010): Does Foreign Direct Investment Promote Growth? Exploring the Role of Financial Markets on Linkages. Journal of Development Economics 91: 242256.

    • Search Google Scholar
    • Export Citation
  • Alguacil, M.Cuadros, A.Orts, V. (2004): Does Saving Really Matter for Growth? Mexico (1970-2000). Journal of International Development 16(2): 281290.

    • Search Google Scholar
    • Export Citation
  • Ang, J. B. (2007): Are Saving and Investment Cointegrated? The Case of Malaysia (1965-2003). Applied Economics 39(17): 21672174.

  • Ang, J. B. (2009a): Financial Development and the FDI-Growth Nexus: The Malaysian Experience. Applied Economics 41(13): 15951601.

  • Ang, J. B. (2009b): Do Public Investment and FDI Crowd in or Crowd out Private Domestic Investment in Malaysia? Applied Economics 41(7): 913919.

    • Search Google Scholar
    • Export Citation
  • Anoruo, E.Ahmad, Y. (2001): Causal Relationship between Domestic Savings and Economic Growth: Evidence from Seven African Countries. African Development Bank. Oxford: Blackwell.

    • Search Google Scholar
    • Export Citation
  • Anwar, S.Nguyen, L. P. (2010): Foreign Direct Investment and Economic Growth in Vietnam. Asia Pacific Business Review 16(1-2): 183202.

    • Search Google Scholar
    • Export Citation
  • Apergis, N.Katrakilidis, C. P.Tabakis, N. M. (2006): Dynamic Linkages between FDI Inflows and Domestic Investment: A Panel Cointegration Approach. Atlantic Economic Journal 34: 385394.

    • Search Google Scholar
    • Export Citation
  • Asheghian, P. (2010): Determinants of Economic Growth in the United States: The Role Foreign Direct Investment. International Trade Journal 18(1): 6383.

    • Search Google Scholar
    • Export Citation
  • Baharumshah, A. Z.Thanoon, M. A. (2006): Foreign Capital Flows and Economic Growth in East Asian Countries. China Economic Review 17: 7083.

    • Search Google Scholar
    • Export Citation
  • Baharumshah, A. Z.Thanoon, M. A.Rashid, S. (2002): Saving Dynamics in Asian Countries. Journal of Asian Economics 13: 827845.

    • Search Google Scholar
    • Export Citation
  • Campos, N.Kinoshita, Y. (2002): Foreign Direct Investment as Technology Transferred: Some Panel Evidence from the Transition Economies. Manchester School 70(3): 398419.

    • Search Google Scholar
    • Export Citation
  • Carroll, C. D.Weil, D. N. (1994): Saving and Growth: A Re-Interpretation. Carnegie-Rochester Conference Series on Public Policy 40: 133192.

    • Search Google Scholar
    • Export Citation
  • Chakrabarti, A. (2001): The Determinants of Foreign Direct Investment: Sensitivity Analyses of Cross-Country Regressions. KYKLOS 54(1): 89114.

    • Search Google Scholar
    • Export Citation
  • Chaudhri, D. P.Wilson, E. (2000): Savings, Investment, Productivity and Economic Growth of Australia 1861-1990: Some Explorations. Economic Record 76(232): 5573.

    • Search Google Scholar
    • Export Citation
  • Chen, C.Cheng, L.Zhang, Y. (1995): The Role of Foreign Direct Investment in China’s Post- 1978 Economic Development. World Development 23(4): 691703.

    • Search Google Scholar
    • Export Citation
  • Chenery, H. B.Strout, A. M. (1966): Foreign Assistance and Economic Development. American Economic Review: 679–733.

  • Choe, J. I. (2003): Do Foreign Direct Investment and Gross Domestic Investment Promote Economic Growth? Review of Development Economics 7(1): 4457.

    • Search Google Scholar
    • Export Citation
  • Chowdhury, A.Mavrotas, G. (2006): FDI and Growth: What Causes What? World Economy 29(1): 919.

  • Cohen, D. (1993): Low Investment and Large LDC Debt in the 1980s. American Economic Review: 437449.

  • Duttaray, M.Dutt, A. K.Mukhopadhyay, K. (2008): Foreign Direct Investment and Economic Growth in Less Developed Countries: An Empirical Study of Causality and Mechanisms. Applied Economics 40(15): 19271939.

    • Search Google Scholar
    • Export Citation
  • Fan, X.Dickie, P. M. (2000): The Contribution of Foreign Direct Investment to Growth and Stability: A Post-Crisis ASEAN-5 Review. Asian Economic Review 17(3): 312323.

    • Search Google Scholar
    • Export Citation
  • Fedderke, J. W.Romm, A. T. (2006): Growth Impact and Determinants of Foreign Direct Investment into South Africa, 1956-2003. Economic Modelling 23(5): 738760.

    • Search Google Scholar
    • Export Citation
  • Feldstein, M.Horioka, C. (1980): Domestic Saving and International Capital Flows. Economic Journal 90: 317323.

  • Gavin, M.Hausmann, R.Talvi, E. (1997): Saving Behaviour in Latin America: Overview and Policy Issues. In: R. Hausmann and H. Reisen (eds): Promoting Savings in Latin America. Paris: OECD and Inter-America Development Bank.

    • Search Google Scholar
    • Export Citation
  • Granger, C. W. J. (1969): Investigating Causal Relations by Econometric Models and Cross Spectral Methods. Econometrica 37: 424438.

  • Griffin, K. B.Enos, J. L. (1970): Foreign Assistance: Objectives and Consequences. Economic Development and Cultural Change 18(3): 313327.

    • Search Google Scholar
    • Export Citation
  • Gruben, W. C.McLeod, D. (1998): Capital Flows, Savings, and Growth in the 1990s. Quarterly Review of Economics and Finance 38(3): 287301.

    • Search Google Scholar
    • Export Citation
  • Gulati, U. C. (1978): Effect of Capital Imports on Savings and Growth in Less Developed Countries. Economic Inquiry 16(4): 563569.

  • Gutiérrez, M.Solimano, A. (2007): Savings, Investment and Growth in the Global Age: Analytical and Policy Issues. American University of Paris Working Paper 43.

    • Search Google Scholar
    • Export Citation
  • Hansen, H.Rand, J. (2006): On the Causal Links between FDI and Growth in Developing Countries. World Economy 29(1): 2141.

  • Herzer, D.Klasen, S.Nowak-Lehmann, D. F. (2008): In Search of FDI-led Growth in Developing Countries: The Way Forward. Economic Modelling 25(5): 793810.

    • Search Google Scholar
    • Export Citation
  • Lee, M.Tcha, M. (2004): The Color of Money: The Effects of Foreign Direct Investment on Economic Growth in Transition Economies. Review of World Economics 140(2): 211219.

    • Search Google Scholar
    • Export Citation
  • Lim, D. (1983): Fiscal Incentives and Direct Foreign Investment in Less Developed Countries. Journal of Development Studies 19(2): 4681.

    • Search Google Scholar
    • Export Citation
  • Lucas, R. (1988): On the Mechanics of Economic Development. Journal of Monetary Economics 22: 342.

  • Mavrotas, G.Kelly, R. (2001): Old Wine in New Bottles: Testing Causality between Savings and Growth. Manchester School 69(1): 97105.

    • Search Google Scholar
    • Export Citation
  • Mencinger, J. (2003): Does Foreign Direct Investment Always Enhance Economic Growth? KYKLOS 56(4): 491508

  • Modigliani, F. (1970): The Life-Cycle Hypothesis of Saving and Inter-Country Differences in the Saving Ratio.” In: Eltis, W. A.Scott, M. F.Wolfe, J. N. (eds.): Induction, Trade, and Growth: Essays in honour of Sir Roy Harrod. Oxford: Clarendon Press.

    • Search Google Scholar
    • Export Citation
  • Moore, B. (2006): Saving is Never a Constraint on Investment. South African Journal of Economics 74(1): 15.

  • Most, S. J.de Berg, H. V. (1996): Growth in Africa: Does the Source of Investment Financing Matter? Applied Economics 28(11): 14271433.

    • Search Google Scholar
    • Export Citation
  • Mottaleb, K. A. (2007): Determinants of Foreign Direct Investment and Its Impact on Economic Growth in Developing Countries. MPRA Paper 9457.

    • Search Google Scholar
    • Export Citation
  • Mullen, J. K.Williams, M. (2005): Foreign Direct Investment and Regional Economic Performance. KYKLOS 58(2): 265282.

  • Narayan, P. K. (2005): The Saving and Investment Nexus for China: Evidence from Cointegration Tests. Applied Economics 37(17): 19791990.

    • Search Google Scholar
    • Export Citation
  • Obstfeld, M. (1986): Capital Mobility in the World Economy: Theory and Measurement. NBER Working Paper 1692.

  • Obwona, M. B. (2001): Determinants of FDI and Their Impact on Economic Growth in Uganda. African Development Review 13(1): 4681.

  • Qi, L. (2007): The Relationship between Growth, Total Investment and Inward FDI: Evidence from Time Series Data. International Review of Applied Economics 21(1): 119133.

    • Search Google Scholar
    • Export Citation
  • Rana, P. B.Dowling, J. M. (1988): The Impact of Foreign Capital on Growth: Evidence from Asian Developing Countries. Developing Economies 26(1): 311.

    • Search Google Scholar
    • Export Citation
  • Reisen, H.Soto, M. (2001): Which Types of Capital Inflows Fosters Developing-Country Growth? International Finance 4(1): 114.

  • Romer, P. (1986): Increasing Returns and Long-Run Growth. Journal of Political Economy 94(5): 10021037.

  • Sahoo, P.Nataraj, G.Kamaiah, B. (2001): Savings and Economic Growth in India: The Long Run Nexus. Savings and Development 25(1): 6780.

    • Search Google Scholar
    • Export Citation
  • Shibata, A.Shintani, M. (1998): Capital Mobility in the World Economy: An Alternative Test. Journal of International Money and Finance 17(5): 741756.

    • Search Google Scholar
    • Export Citation
  • Sims, C. (1980): Macroeconomics and Reality. Econometrica 48: 148.

  • Sinha, D.Sinha, T. (1998): Cart before the Horse? The Saving-Growth Nexus in Mexico. Economic Letters 61: 4347.

  • Sinn, S. (1992): Saving-Investment Correlations and Capital Mobility: On the Evidence from Annual Data. Economic Journal 102(414): 11621170.

    • Search Google Scholar
    • Export Citation
  • Solow, R. (1956): A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics 70(1): 6594.

  • Stoneman, C. (1975): Foreign Capital and Economic Growth. World Development 3(1): 1l26.

  • Szent-Iványi, B. Vigvári, G. (2012): Spillovers from Foreign Direct Investment in Central and Eastern Europe. Society and Economy 34(1): 5172.

    • Search Google Scholar
    • Export Citation
  • Tang, S.Selvanathan, E. A.Selvanathan, S. (2008): Foreign Direct Investment, Domestic Investment and Economic Growth in China: A Time Series Analysis. World Economy 31(10): 12921309.

    • Search Google Scholar
    • Export Citation
  • Taylor, A. M. (1994): Domestic Saving and International Capital Flows Reconsidered. National Bureau of Economic Research Working Paper 4892.

    • Search Google Scholar
    • Export Citation
  • Tekin, R. B. (2012): Economic Growth, Exports and Foreign Direct Investment in Least Developed Countries: A Panel Granger Causality Analysis. Economic Modelling 29(3): 868878.

    • Search Google Scholar
    • Export Citation
  • Tesar, L. L. (1991): Savings, Investment and International Capital Flows. Journal of International Economics 31(1): 5578.

  • Weisskopf, T. E. (1972): The Impact of Foreign Capital Inflow on Domestic Savings in Underdeveloped Countries. Journal of International Economics 2(1): 2538.

    • Search Google Scholar
    • Export Citation
  • Wong, D. (1990): What do Saving-Investment Relationships Tell Us about Capital Mobility? Journal of International Money and Finance 9(1): 6074.

    • Search Google Scholar
    • Export Citation
  • Yasin, M. (2005): Official Development Assistance and Foreign Direct Investment Flows to Sub- Saharan Africa. African Development Review 17(1): 2340.

    • Search Google Scholar
    • Export Citation
  • Collapse
  • Expand

Editor-in-chief: Balázs SZENT-IVÁNYI

Co-Editors:

  • Péter MARTON (Corvinus University, Budapest)
  • István KÓNYA (Corvinus University, Budapest)
  • László SAJTOS (The University of Auckland)
  • Gábor VIRÁG (University of Toronto)

Associate Editors:

  • Tamás BOKOR (Corvinus University, Budapest)
  • Sándor BOZÓKI (Corvinus University Budapest)
  • Bronwyn HOWELL (Victoria University of Wellington)
  • Hintea CALIN (Babeş-Bolyai University)
  • Christian EWERHART (University of Zürich)
  • Clemens PUPPE (Karlsruhe Institute of Technology)
  • Zsolt DARVAS (Bruegel)
  • Szabina FODOR (Corvinus University Budapest)
  • Sándor GALLAI (Corvinus University Budapest)
  • László GULÁCSI (Óbuda University)
  • Dóra GYŐRFFY (Corvinus University Budapest)
  • György HAJNAL (Corvinus University Budapest)
  • Krisztina KOLOS (Corvinus University Budapest)
  • Alexandra KÖVES (Corvinus University Budapest)
  • Lacina LUBOR (Mendel University in Brno)
  • Péter MEDVEGYEV (Corvinus University Budapest)
  • Miroslava RAJČÁNIOVÁ (Slovak University of Agriculture)
  • Ariel MITEV (Corvinus University Budapest)
  • Éva PERPÉK (Corvinus University Budapest)
  • Petrus H. POTGIETER (University of South Africa)
  • Sergei IZMALKOV (MIT Economics)
  • Anita SZŰCS (Corvinus University Budapest)
  • László TRAUTMANN (Corvinus University Budapest)
  • Trenton G. SMITH (University of Otago)
  • György WALTER (Corvinus University Budapest)
  • Zoltán CSEDŐ (Corvinus University Budapest)
  • Zoltán LŐRINCZI (Ministry of Human Capacities)

Society and Economy
Institute: Corvinus University of Budapest
Address: Fővám tér 8. H-1093 Budapest, Hungary
Phone: (36 1) 482 5406
E-mail: balazs.szentivanyi@uni-corvinus.hu

Indexing and Abstracting Services:

  • CABELLS Journalytics
  • DOAJ
  • International Bibliographies IBZ and IBR
  • International Political Science Abstracts
  • JSTOR
  • SCOPUS
  • RePEc
  • Referativnyi Zhurnal

 

2023  
Scopus  
CiteScore 1.5
CiteScore rank Q2 (Sociology and Political Science)
SNIP 0.496
Scimago  
SJR index 0.243
SJR Q rank Q3

Society and Economy
Publication Model Gold Open Access
Submission Fee none
Article Processing Charge 900 EUR/article with enough waivers
Regional discounts on country of the funding agency World Bank Lower-middle-income economies: 50%
World Bank Low-income economies: 100%
Further Discounts Sufficient number of full waiver available. Editorial Board / Advisory Board members: 50%
Corresponding authors, affiliated to an EISZ member institution subscribing to the journal package of Akadémiai Kiadó: 100%
Subscription Information Gold Open Access

Society and Economy
Language English
Size B5
Year of
Foundation
1972
Volumes
per Year
1
Issues
per Year
4
Founder Budapesti Corvinus Egyetem
Founder's
Address
H-1093 Budapest, Hungary Fővám tér 8.
Publisher Akadémiai Kiadó
Publisher's
Address
H-1117 Budapest, Hungary 1516 Budapest, PO Box 245.
Responsible
Publisher
Chief Executive Officer, Akadémiai Kiadó
ISSN 1588-9726 (Print)
ISSN 1588-970X (Online)