The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia

Alfusainey Touray

doi:doi:10.11648/j.jwer.20200901.11

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The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia

Alfusainey Touray

Published in Journal of World Economic Research (Volume 9, Issue 1)

Received: 24 June 2019 Accepted: 9 September 2019 Published: 4 January 2020

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Abstract

The purpose of this study is to empirically examine the dynamic impact of the stock of foreign direct investment (FDI) inflows on the aggregate income of The Gambia. In order to find the dynamic nexus, the ARDL model was used to capture both short-run and the long-run impact of FDI inflows. The result shows that FDI has a negative impact on income in the short-run. The bounds testing for cointegration showed that there is a long-run level relationship between income and FDI inflows, and the impact of FDI inflows on income in the long-run is positive. In order to examine the possible reason why FDI inflows have a different impact in the short-run and the long-run, the study empirically investigates how the interaction of FDI inflows and domestic investment affects income. The results showed that in the short-run FDI inflows crowded-out domestic investment and this led to FDI inflows to have a negative impact on income in the short-run. Moreover, the results also showed that in the long-run the FDI inflows complemented domestic investment and this led to FDI inflows to have a positive impact on aggregate income in the long-run. The conclusion drawn from this study is that the net impact of FDI inflows on the aggregate income of The Gambia depends on the degree of complementarity and substitution between FDI inflows and domestic investment.

Published in	Journal of World Economic Research (Volume 9, Issue 1)
DOI	10.11648/j.jwer.20200901.11
Page(s)	1-9
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Foreign Direct Investment, ARDL, Bounds Testing, Cointegration, Aggregate Income, The Gambia

References

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APA Style

Alfusainey Touray. (2020). The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia. Journal of World Economic Research, 9(1), 1-9. https://doi.org/10.11648/j.jwer.20200901.11

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ACS Style

Alfusainey Touray. The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia. J. World Econ. Res. 2020, 9(1), 1-9. doi: 10.11648/j.jwer.20200901.11

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AMA Style

Alfusainey Touray. The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia. J World Econ Res. 2020;9(1):1-9. doi: 10.11648/j.jwer.20200901.11

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@article{10.11648/j.jwer.20200901.11,
  author = {Alfusainey Touray},
  title = {The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia},
  journal = {Journal of World Economic Research},
  volume = {9},
  number = {1},
  pages = {1-9},
  doi = {10.11648/j.jwer.20200901.11},
  url = {https://doi.org/10.11648/j.jwer.20200901.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20200901.11},
  abstract = {The purpose of this study is to empirically examine the dynamic impact of the stock of foreign direct investment (FDI) inflows on the aggregate income of The Gambia. In order to find the dynamic nexus, the ARDL model was used to capture both short-run and the long-run impact of FDI inflows. The result shows that FDI has a negative impact on income in the short-run. The bounds testing for cointegration showed that there is a long-run level relationship between income and FDI inflows, and the impact of FDI inflows on income in the long-run is positive. In order to examine the possible reason why FDI inflows have a different impact in the short-run and the long-run, the study empirically investigates how the interaction of FDI inflows and domestic investment affects income. The results showed that in the short-run FDI inflows crowded-out domestic investment and this led to FDI inflows to have a negative impact on income in the short-run. Moreover, the results also showed that in the long-run the FDI inflows complemented domestic investment and this led to FDI inflows to have a positive impact on aggregate income in the long-run. The conclusion drawn from this study is that the net impact of FDI inflows on the aggregate income of The Gambia depends on the degree of complementarity and substitution between FDI inflows and domestic investment.},
 year = {2020}
}

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TY  - JOUR
T1  - The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia
AU  - Alfusainey Touray
Y1  - 2020/01/04
PY  - 2020
N1  - https://doi.org/10.11648/j.jwer.20200901.11
DO  - 10.11648/j.jwer.20200901.11
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 1
EP  - 9
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20200901.11
AB  - The purpose of this study is to empirically examine the dynamic impact of the stock of foreign direct investment (FDI) inflows on the aggregate income of The Gambia. In order to find the dynamic nexus, the ARDL model was used to capture both short-run and the long-run impact of FDI inflows. The result shows that FDI has a negative impact on income in the short-run. The bounds testing for cointegration showed that there is a long-run level relationship between income and FDI inflows, and the impact of FDI inflows on income in the long-run is positive. In order to examine the possible reason why FDI inflows have a different impact in the short-run and the long-run, the study empirically investigates how the interaction of FDI inflows and domestic investment affects income. The results showed that in the short-run FDI inflows crowded-out domestic investment and this led to FDI inflows to have a negative impact on income in the short-run. Moreover, the results also showed that in the long-run the FDI inflows complemented domestic investment and this led to FDI inflows to have a positive impact on aggregate income in the long-run. The conclusion drawn from this study is that the net impact of FDI inflows on the aggregate income of The Gambia depends on the degree of complementarity and substitution between FDI inflows and domestic investment.
VL  - 9
IS  - 1
ER  -

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Author Information

Alfusainey Touray

College of Management & Information Technology, American International University, Banjul, The Gambia

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Plain Text BibTeX RIS

APA Style

Alfusainey Touray. (2020). The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia. Journal of World Economic Research, 9(1), 1-9. https://doi.org/10.11648/j.jwer.20200901.11

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ACS Style

Alfusainey Touray. The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia. J. World Econ. Res. 2020, 9(1), 1-9. doi: 10.11648/j.jwer.20200901.11

Copy | Download

AMA Style

Alfusainey Touray. The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia. J World Econ Res. 2020;9(1):1-9. doi: 10.11648/j.jwer.20200901.11

Copy | Download

@article{10.11648/j.jwer.20200901.11,
  author = {Alfusainey Touray},
  title = {The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia},
  journal = {Journal of World Economic Research},
  volume = {9},
  number = {1},
  pages = {1-9},
  doi = {10.11648/j.jwer.20200901.11},
  url = {https://doi.org/10.11648/j.jwer.20200901.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20200901.11},
  abstract = {The purpose of this study is to empirically examine the dynamic impact of the stock of foreign direct investment (FDI) inflows on the aggregate income of The Gambia. In order to find the dynamic nexus, the ARDL model was used to capture both short-run and the long-run impact of FDI inflows. The result shows that FDI has a negative impact on income in the short-run. The bounds testing for cointegration showed that there is a long-run level relationship between income and FDI inflows, and the impact of FDI inflows on income in the long-run is positive. In order to examine the possible reason why FDI inflows have a different impact in the short-run and the long-run, the study empirically investigates how the interaction of FDI inflows and domestic investment affects income. The results showed that in the short-run FDI inflows crowded-out domestic investment and this led to FDI inflows to have a negative impact on income in the short-run. Moreover, the results also showed that in the long-run the FDI inflows complemented domestic investment and this led to FDI inflows to have a positive impact on aggregate income in the long-run. The conclusion drawn from this study is that the net impact of FDI inflows on the aggregate income of The Gambia depends on the degree of complementarity and substitution between FDI inflows and domestic investment.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - The Nexus Between Income and Foreign Direct Investment: Evidence from the Gambia
AU  - Alfusainey Touray
Y1  - 2020/01/04
PY  - 2020
N1  - https://doi.org/10.11648/j.jwer.20200901.11
DO  - 10.11648/j.jwer.20200901.11
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 1
EP  - 9
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20200901.11
AB  - The purpose of this study is to empirically examine the dynamic impact of the stock of foreign direct investment (FDI) inflows on the aggregate income of The Gambia. In order to find the dynamic nexus, the ARDL model was used to capture both short-run and the long-run impact of FDI inflows. The result shows that FDI has a negative impact on income in the short-run. The bounds testing for cointegration showed that there is a long-run level relationship between income and FDI inflows, and the impact of FDI inflows on income in the long-run is positive. In order to examine the possible reason why FDI inflows have a different impact in the short-run and the long-run, the study empirically investigates how the interaction of FDI inflows and domestic investment affects income. The results showed that in the short-run FDI inflows crowded-out domestic investment and this led to FDI inflows to have a negative impact on income in the short-run. Moreover, the results also showed that in the long-run the FDI inflows complemented domestic investment and this led to FDI inflows to have a positive impact on aggregate income in the long-run. The conclusion drawn from this study is that the net impact of FDI inflows on the aggregate income of The Gambia depends on the degree of complementarity and substitution between FDI inflows and domestic investment.
VL  - 9
IS  - 1
ER  -

Copy | Download