The Net Inflow Of Fdi Into The Developing Countries

Synchronously, the developing economies such as some Asian and South American regions which exported their experienced workers to the overseas market can also reduce the unemployment pressure that governments must face in long-term period. On the other hand, international remittances are beneficial for both migrant-sending and migrant-receiving countries. Statistics discovered that the international remittances transmitted to the homeland of 35 to 40 million migrant workers are currently estimated to be about US $66 billion per year, and represent the second largest international monetary trade flow, exceeded only by petrol (Sasikumar 2001). For the countries which exported labour to rich countries, they would gain enormous exchange funds from international remittances and regard the money as foreign investment to facilitate their economic development. By contrary, for these migrant-receiving countries, the outflow of vast domestic currency would take away some financial threats such as malignant inflation to a great extend. Nay, the popularization of one country's currency could also accelerate its economic fluidity and strengthen its economic influence to the other countries.

Remittance occurs when an expatriate sends funds to their country of origin. It provides an outside source of income for the country while forcing citizens to look for jobs outside of these underdeveloped nations. Investopedia mentions the importance of this to the economic development of countries by stating that “in 2014 $583 billion in USD was transferred between countries, $436 Billion in USD was transferred was received by developing countries” (Investopedia, 2005). This fact demonstrates how the emergence of remittance with globalization has opened up developing countries to new economic opportunities. Haiti has become a key example of how a country has become reliable on this form of economic contribution. According to a 2010 report

Andras, 2010). This type of threat can leave businesses suffering in a marketplace for inappropriate reasons.

The international Monetary Fund describes remittances as international transfers of funds sent by migrant workers from the country where they are migrated to work to people who are typically their family members in their home country. Remittances represent household income from foreign economies coming from temporary or permanent movement of people to those foreign economies. Global remittances are primarily derived from two parts in the balance of payment framework which are income earned by workers in economies where they are migrated and the other part is the transfer from occupants of one economy to occupant of another

Remittance gets momentum in recent time in Bangladesh and is the second largest sector of foreign exchange earnings after the garments sector. If cost of imported raw materials is deducted from the foreign exchange earning of the garments sector, remittance becomes the single largest sector of foreign exchange earnings. Remittance earning is increasing day by day but at a lower rate than the increase in emigration from Bangladesh due to the increasing share of unskilled or semi-skilled labors than the professionals in international migration. The share of remittance in GNI (Gross National Income) is increasing day by day. It affects almost all the macro-economic indicators of a country positively. Though there are also negative sides of remittance earning e.g. brain drain, its overall contribution to Bangladesh economy is very much effective. Appropriate and timely government policies and initiatives can boost up the amount of remittance and can rectify the problems related to it. Remittance has created a new dimension in the economic development of Bangladesh. We have to properly unlock the potentialities of remittances and utilize it

Statistical and empirical analysis is something that is very valuable despite the application and system in question. This is true when the variables and facts are fairly straightforward and simple and it also holds true when the systems involved are very complex and large in nature. The latter is clearly the case when it comes to the impact and result of direct foreign investment in a given country. Such will be the point of empirical analysis for this report and the country that shall be used for the

Since World War II, trade between growing and manufacturing nations has strengthened and borrowing of poor countries from the rich countries has increased. The growing link between these two groups of economies increased eventually in addition to the increase in the rate of dependability amongst them. With the rapid growth in wealth and industrialization of the First World, only a few developing countries managed to have adequate economic growth on the line of the developed countries. Many of the developing countries which were poor at that time still remained to be poor today even today in comparison to the industrialized nations. Dearth of capital and skilled labor produces a low level of per capita income preventing the developing countries to realize their economies of scale through which many of the developed countries benefit from. Several attempts have been made by developed countries to decrease the disparities between rich and the poor economies. To finance their domestic investment, developing countries rely on other governments or international organizations like International Monetary Fund (IMF) and World Bank to procure loans. Besides these loans, foreign investments in these countries are financed by private companies, this from of investment is known as Foreign Direct Investment (FDI). In case of FDIs, the foreign companies, especially Transnational Corporations (TNCs), invest in the growing nations and remain as the solitary owners of these

In recent times, overseas workers have been sending larger remittances annually to their home countries. These remittances proves to be a vital source of foreign exchange for developing countries. The overall development impact of remittances, however, has not been well established. Remittances are spent primarily on day-to-day consumption expenditures, housing, land purchase, and debt repayment. Remittances are also directed into productive investments. Remittances spent on domestic goods and services in Pakistan provide motivation to domestic industries. From a macroeconomic perspective, remittances can boost aggregate demand and thereby GDP as well as a catalyst for economic growth.

〖FDI〗_. represents the foreign direct investment inflow into partner countries (in current USD). An inflow of cash will lead to a temporary financial solvency in recipient countries, which enables the consumers of those countries to buy more differentiated products. However, because it is a temporary cash inflow, the FDI inflow might have an inverse effect as well and therefore the predicted sign for this variable was indeterminate. The results of regression analysis indicate that the FDI coefficient is -0.03 which indicates a negative relationship with the logistic transformation of IIT, but the parameter estimate is statistically insignificant.

plague the other two major FDI data resources (IMF and OECD) as well. 1 In addition, since

Worker remittances that are an important source of funding the trade deficit are continuing to increase. In the first four months remittances increased by 16 per cent compared to that of the comparable period last. This is good news in a context when there was considerable uncertainty about remittances growing owing to the turmoil in the Middle East.

It has been widely believed that Foreign Direct Investment (FDI) assists developing countries with the much-needed capital for economic growth. Part of the foreign direct investment is the inflow of up to date technology and management skills. In this paper, I will investigate to what extent foreign direct investment inflows into Ghana affects the nation 's Economic Growth and Development by addressing selected macro economic variables including GDP, Employment and Wages (Income). The Heckscher-ohlin model will be used to examine the relationship between foreign direct investment and Economic growth whiles Graphical analysis will be used to determine the effects of foreign direct investment on the selected macroeconomic variables. What has increasing FDI inflows contributed to Ghana’s economic growth? Has the contribution increased or decreased overtime? Has the effects of foreign direct investment inflows into Ghana been positive or negative? The study seeks to answer these and many more questions on the effects of foreign direct investment. I hypothesize that foreign direct investment has no significant impact on GDP but positively affects employment and wages overtime. Foreign direct investment should therefore be encouraged in developing countries like Ghana.

For instance, Oji-Okoro (2010) in his study, the relationship between FDI and telecommunication growth in Nigeria, expounded that FDI influx boosted the growth of the country’s telecommunication sector tremendously. A host of research has been carried out to investigate the significance of foreign direct investment on the economy of Nigeria; however, most of these researches are concentrated on the sector where the large chunk of these investments goes to--the oil and gas sector. The low level of foreign direct investment in the agricultural sector might be one major reason why not much work has been done to analyze the impact of FDI in Nigeria’s agricultural sector. A sectorial analysis of cumulative foreign direct investment in Nigeria from 1980-2007 is described in Figure 1. The major gap this study points out and intends to address is that, studies that have even attempted to empirically study the impact of FDI in the agricultural sector of Nigeria use the FDI that is obtained in the entire economy

Results of the study suggests causality in both directions (i.e. ‘XBD’ depends on ‘FDIBD’ and ‘FDIBD’ depends on ‘XBD’). It may be mentioned that the main objective of this analysis is related to first one only. However, second causation also provides worthwhile information for further studies. Results of the analysis are given in Table-1. The results reject the null hypothesis (of no causality) and statistically prove causality between FDI and exports in both directions.

Present study employs secondary data on the concerned variables such as Indian FDI flows, structure of Indian FDI, Nepalese GDP, investment and export from FY 1988/89 to 2013/14. The necessary data are taken from Economic Survey 2013/14 and Department of Industry, Nepal. The data are transformed into real terms taking 2005/06 as the base year and data sets in real terms are converted into logarithmic forms hereafter these are denoted by 〖LnGDP〗_t,〖LnFDI〗_t 〖LnI〗_t and 〖LnX〗_t .