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http://dx.doi.org/10.13106/jafeb.2022.vol9.no1.0203

Revisiting the Nexus of Foreign Direct Investment, Financial Development, and Economic Growth: The Case of Emerging Economies  

KUMAR, Jai (School of International & Public Affairs, Jilin University)
SOOMRO, Ahmed Nawaz (School of Management and Economics (MBA Education Center), North China University of Water Resources and Electric Power)
KUMARI, Joti (Business School, Sichuan University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.9, no.1, 2022 , pp. 203-211 More about this Journal
Abstract
Foreign direct investment (FDI) has increased at an exponential rate during the last two decades. It is now a feature of emerging market economies as well. Foreign direct investment and financial development are important factors in an economy's growth. Various studies have examined the impact of foreign direct investment and financial development on economic growth in different countries and areas. However, the findings are currently inconclusive. Using updated data from 1970 to 2020, this study will examine the relationships between FDI, financial development, and economic growth in 30 rising economies.GDP is the dependent variable, while FDI, financial development, trade openness, infrastructure, exchange rate, and GDP growth are the independent factors. To estimate the panel data, we used the most recent econometric models. The study's major findings suggest that FDI and financial development are critical determinants in emerging economies' economic progress. Furthermore, multiple robustness checks supported the study's empirical findings. The results of this study include various practical recommendations for investors, governments, and policymakers, given the increased interest in global economic integration and member states' reliance on FDI as a critical aspect of sustaining prosperity.
Keywords
FDI; Financial Development; Economic Growth; Emerging Economies;
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