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The purpose of this paper is to consider the heterogeneous relationship among financial development, foreign direct investment (FDI) and economic growth, examining the possible directions of causality among them in both the short and long runs.

A sample of the G-20 countries over the period 1970–2016 is utilized. A vector error-correction model is used to consider the possible directions of causality among financial development, FDI and economic growth.

Results suggest a cointegrating relationship among the three series. Although short-run links among the variables are mostly non-uniform, both financial development and FDI matter in the determination of long-run economic growth.

Attention must be paid to policies that promote financial development. This, in turn, calls for fostering incentives to guarantee continued support to liberalize the economy and promoting capital openness. Additionally, financial infrastructure should be improved to improve financial innovation. The establishment of a well-developed financial market, including well-functioning banks and other financial institutions, can facilitate further investment and an easier means of raising capital to support the activities of FDI. Economic growth can ultimately be elevated through both financial development and FDI.

The study considers a sample of the G-20 countries, which have received relatively little attention in the existing literature. In addition, the study concurrently analyses the trivariate causal relationship among financial development, FDI and economic growth, a topic on which there has been a dearth of research.

The effect of foreign direct investment (FDI) on economic growth is widely believed to be contingent on the development of the financial sector. Nevertheless, as the possibility that the effect of financial development on growth being contingent on FDI has been neglected in existing literature, the authors have investigated it in this paper. In general, the purpose of this paper is to examine the effect of financial development and FDI on economic growth in Sudan using annual data from 1970 to 2014.

Since most of the macroeconomic variables are subject to unit root problem, the time series data are assessed using unit root and cointegration tests with/without structural break. Moreover, the study uses the fully modified ordinary least squares and the dynamic ordinary least squares techniques to estimate the long-run model.

The results of the cointegration tests provide evidence that a long-run relationship exists among variables even after accounting for the structural break. The results show that financial development and FDI are positive and significant in explaining economic growth in Sudan. Financial development is found to be more beneficial to economic growth than FDI. Moreover, the findings reveal that FDI leads to better economic performance through financial development. Interestingly, the findings of the study show that the effect of financial development on economic growth is further enhanced by the inflows of FDI.

The government should focus on promoting FDI in more productive sectors. In addition, further cooperation with multinational enterprises is needed to increase FDI in the country.

This is the first paper that empirically examines both the interlinked impact of FDI on growth through financial development and the impact of financial development on economic growth through FDI in Sudan using appropriate econometric methods.

This paper aims to investigate the impact of FDI on the stock market development in Pakistan, both aggregate as well as sector wise, the reason being that no such work has been carried out in this context.

The study is based on secondary data for the period 1985‐2011. Johansen co‐integration approach is used for determining relationship among variables for aggregate stock market development in long run. Granger causality test is also applied to check the causal relation between the variables. Correlation analysis and regression analysis has been used for examining the relationship of sector wise development, FDI and economic growth in Pakistan.

The results support the positive role of FDI in boosting the aggregate stock market development in long run. Bi‐directional causality between FDI and economic growth has been found along with the uni‐directional causality between aggregate stock market development and economic growth. For sector wise development the relationship of FDI is positive in the sectors where FDI concentration is high in recent years whereas and negative in other sectors.

Co‐integration coefficients showed a positive and statistically strong relationship between FDI and aggregate market capitalization thus reflecting the complementary role of FDI in the stock market development of Pakistan.

Understanding economic development in the transition economies of Central and Eastern Europe (CEE) requires an analysis of investment in these economies. Previous analyses, however, have focused primarily if not singularly on the role of foreign direct investment (FDI; Akbar & McBride, 2004; Clague & Rausser, 1992; Uhlenbruck & De Castro, 2000). This focus follows that of regional policy-makers, who heavily encouraged FDI through acquisition or greenfield investments (Frydman, Rapaczynski, & Earle, 1993). These policy-makers, however, additionally established stock exchanges in each of their countries. There are now at least 24 operating stock exchanges in CEE and the countries that previously made up the former Soviet Union and the former Yugoslavia.¹ The role of the development of these local stock exchanges in the development (LSED) of local economies (primarily through foreign portfolio investment) has not yet been systematically examined, nor has it been linked explicitly to the role of FDI. Finally, the role of local companies’ listings on foreign exchanges (FSEL) has not been examined in tandem with the role of FDI or LSED (for an examination of the relationship between FDI, LSED, and FSEL, however, see Claessens, Klingebiel, & Schmukler, 2001).

The prime objective of this study is to offer fruitful implications about allocation and directing foreign direct investment (FDI) to gain maximum economic advantage. The study offers innovative findings by contributing to a new angle.

The study used the annual data of 24 countries, for the period of 1995–2016 and employed quantile regression and GMM as main estimation techniques. For robustness of empirical findings and to check income effect, the study divided the countries as high income, low-income panels.

Overall, the findings reported very interesting and surprising results as regional analysis. The results show the sensitivity of FDI for Middle East and high-income group of countries, inferring that there might several other factors due to which FDI is adversely affecting growth and these countries need to reform institutional quality.

The paper is restricted for 24 countries of Asia and Middle East, based on the data availability.

The high-income countries should put more efforts to attract funds. The Asian and Middle East countries countries can update trade regulations to encourage entrepreneurs and reduce trade tariffs.

The present study investigated the role of FDI for economic growth in the context of Belt and Road Initiative countries of Middle East and Asian regions. The paper reviewed the past literature and identified regional analysis as a research gap to focus on Belt and Road Initiative in Asia and Middle East region.

Unlike the traditional growth model of emerging markets after economic liberalization, India’s inward foreign direct investment (FDI) surged paralleling its strong economic growth in the 2000s, despite the failure to establish a strong secondary sector. This creates an opportunity to deepen the conceptual and contextual understanding of the pivotal mechanisms that impel foreign multinational enterprises to invest into India and provides a natural setting to better understand the nature of its institutional, political and economic environment.

The authors develop a theory contextualized to Indian inward FDI patterns for the 2000–2017 period. The theoretical framework expands upon received investment motives, with explicit consideration given to the idiosyncrasies of developments in India’s recent macro and socioeconomic environment. The authors test the hypotheses using panel data from 134 countries that invested in India, using a Hausman–Taylor estimation.

The authors find that India’s transition toward a knowledge economy attracts asset augmenting rather than asset exploiting FDI. Investors appear to target long-term investments by gaining access to India’s digital capabilities, R&D, and growing talent base with a high degree of specialization within analytics, biotechnology, engineering, or pharmaceuticals. Foreign investors do not seem to be notably deterred by infrastructural challenges nor by legal and regulatory restrictions.

By providing a new perspective on India’s atheoretical economic development and FDI environment, this study offers a distinct point of comparison with regard to established hypotheses within the extant literature on FDI into emerging markets. Rethinking contemporary investment motive theory by introducing an adapted conceptual framework provides further opportunity to inform the understanding of firm strategies in similar environments.

The current study contributes to filling the gap in studies that discuss the impact of foreign direct investment (FDI) on economic growth and employment in Saudi Arabia. Although the study found that FDI inflows contribute to the government effort to reduce or at least control the high unemployment rate, the study found no relationship between FDI inflows and economic growth in Saudi Arabia. However, we must be careful in interpreting the result of the positive influence of FDIs on employment since almost half of the Saudi workforce is employed by the public sector. The paper aims to discuss these issues.

Data regarding FDI inflow to Saudi Arabia were collected from the World Bank database and the Saudi Arabian General Investment Authority (SAGIA), while GDP per capita (economic growth) used data from the World Bank database only. Unemployment rate data were collected from the SAMA annual book. This study covered the period from 1999 through 2012. The study used the time series analysis methodology to study the impact of FDI inflow on economic growth and employment in Saudi Arabia.

Although the current study found that FDI inflows contribute to the government’s effort by reducing or at least controlling the country’s high unemployment rate, it also found no relationship between FDI inflows and economic growth in Saudi Arabia. However, we must be careful in interpreting the result of the positive influence of FDI on employment since almost half of the Saudi workforce is employed by the public sector.

In recent years, the government of Saudi Arabia has issued a number of initiatives to achieve diversification of income sources, create jobs for Saudi workers, and transfer advanced administrative techniques and technology to the Saudi economy; one of these initiatives involves attracting foreign investors to the Saudi market. This study contributes to fill the gap in studies that discuss the impact of FDI inflows on economic growth and employment in Saudi Arabia.

This study focuses on the relationship between foreign direct investment (FDI) and economic growth of the formal sector comprising all foreign and domestic registered enterprises engaged in production of goods and services.

This study uses a balanced longitudinal data set for the period from 2006 to 2014 from secondary sources in 63 provinces/cities of Vietnam. The generalized method of moments (GMM) estimation for a dynamic panel data model is applied.

The greater the share of FDI in capital resource, the more favorable the output growth in the whole formal sector. The FDI enterprises are more productive than domestic formal firms, and the output growth of FDI firms creates a positive spillover effect on the output growth of domestic firms.

The effect of FDI on economic growth is investigated at subnational level for the whole formal economic sector as well as the formal domestic firms. The domestic and foreign industrial agglomerations and the business environment are also examined.

This paper measures the impacts of foreign direct investment (FDI), globalisation and political governance on economic growth in West Africa. The empirical analysis also includes the interaction effect of political governance and FDI on the growth of the sub-region, over the period of 1996–2016.

The study employs the autoregressive distributed lag technique on data obtained from the World Bank and the KOF institute.

The study findings suggest a positive relationship between globalisation and political governance on economic growth. Even though there have been inconclusive results on the FDI–growth nexus, the authors found that FDI stimulates the growth of the sub-region, while political governance enhances the positive impact of FDI on economic growth. The other factors of growth included are labour, capital and government size, whose effects on growth are, respectively, negative, negative and positive.

The governments of the West African countries promote policies that attract FDI into the sub-region, so that economic performances may be enhanced. In addition, the governments of the West African sub-region should work to reap the benefits of globalisation, by promoting the competitiveness of their local economies in order to keep pace with the global markets. Finally, the political-governance infrastructures should be overhauled; the culture of accountability and transparency should be promoted, while all efforts should be made to improve stability in the political environment in order to increase investors' confidence in the West African economy.

This study is the first to single out the impacts of political governance, as categorised by the World Bank, through both direct and interactive measures. This is necessary in view of the assertion that political governance largely accounts for improved economic performance in an economy. The use of the Pesaran (2007) technique of unit root is also a deviation from existing studies. This is in view of the fact that it tests variable unit root in the presence of cross-sectional dependence; thus, controlling for contemporaneous correlation which was not considered in the first-generation tests.