AJOU Central Library Repository: THE IMPACT OF FOREIGN CAPITAL INFLOWS ON ECONOMIC GROWTH

THE IMPACT OF FOREIGN CAPITAL INFLOWS ON ECONOMIC GROWTH

Alternative Abstract: The aim of this study is to investigate empirically the impact of foreign capital inflows on the economic growth in Algeria and in closing the saving-investment gap, specifically to test whether the two selected variables; FDI and Remittances have an impact on growth in both short and long run. The study carried out based on a data from 1985-2015 by considering the relationship between GDP, FDI, and REM. The analyses are conducted through econometric methods. In this study, the cointegration model was estimated by applying the Engle-Granger (1989) two-step estimation procedure, the basic unit root test based on ADF is conducted to test the integrating order and found that two variables LOGGDP and LOGREM are stationary in the first difference, however, LOGFDI is found stationary at level. Regarding to the empirical result, and based on VAR equation, FDI showed a significant effect on economic growth in Algeria, which means that FDI is playing a positive role in boosting the economic growth in Algeria. However, remittances showed a negligible impact on GDP, which can be explained mainly by the dissipating of this money on consumption without using them in activities that can create any added value or boost the development in the country.

Appears in Collections:: Special Graduate Schools > Graduate School of International Studies > Department of International Trade > International Trade > 3. Theses(Master)

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