Article Sidebar

Submitted
April 27, 2023
Accepted
September 21, 2023
Published
November 1, 2023
Download
Full text PDF
Statistic
Read Counter : 332 Download : 553

Downloads

Download data is not yet available.

Main Article Content

Abstract

Purpose ― This study aims to investigate the impact of FDI inflows on Trade in Azerbaijan from 1993 to 2021.
Method ― This study uses the datasets from the World Bank Database. It employs the Augmented Dickey and Fuller (ADF), Phillips and Perron (PP), Zivot and Andrews (ZA), ARDL bounds testing approach, and the Granger Causality tests for the empirical part of the study.
Findings ― The bound test shows the presence of cointegration between FDI and Export. The estimated long-run equation suggests a positive and significant relationship, whereas the estimated short-run equation indicates a positive but insignificant relationship between FDI and export. Additionally, the results of Granger causality test show a unidirectional causality running from FDI to export.
Implications ― Since the FDI inflows show a positive effect on the export of Azerbaijan, most foreign investments come into the oil and gas sector. Accordingly, oil and gas products and services account for a significant share of exports in Azerbaijan. Policymakers might need new regulations to attract more attention from foreign investors to non-oil sectors.
Originality/value ― There were vast studies about FDI and trade relationships in different countries with different techniques. This study is unique because it employs a new methodology and the latest dataset in which Azerbaijan was a focused area for the first time.

Keywords

FDI Export Azerbaijan Unit root tests ARDL bounds testing approach Granger causality

Article Details

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

How to Cite
Calal, M. H., Ilham, K. M., Vaqif, N. E., Calal, Z. E., & Mardan, T. G. . (2023). The role of the Foreign Direct Investment inflows on export in Azerbaijan: An ARDL approach. Economic Journal of Emerging Markets, 15(2), 160–172. https://doi.org/10.20885/ejem.vol15.iss2.art4
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Basilgan, M., & Akman, A. S. (2019). An empirical analysis on the impact of foreign direct investments on export performance: Turkey case. International Journal of Economics and Finance Studies, 11(2), 89–105.
  2. Cetin, M., & Seker, F. (2013). Doğrudan yabancı yatırımlar ve ihracat ilişkisi: Gelişmekte olan ülkeler üzerine bir nedensellik analizi. Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi, 8(1), 121–142. https://doi.org/10.34109/ijefs.201911206
  3. Dickey, D. A., & Fuller, W. A. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica: Journal of the Econometric Society, 1057–1072. https://doi.org/10.2307/1912517
  4. Dunning, J. H. (1974). The distinctive nature of the multinational enterprise. Economic Analysis and the Multinational Enterprise (pp. 13–30). Routledge. https://doi.org/ 10.4324/9781315824000
  5. Dunning, J. H. (1977). Trade, location of economic activity and the MNE: A search for an eclectic approach. In B. Ohlin, P.-O. Hesselborn, & P. M. Wijkman (Eds.), The International Allocation of Economic Activity: Proceedings of a Nobel Symposium held at Stockholm (pp. 395–418). Palgrave Macmillan UK. https://doi.org/10.1007/978-1-349-03196-2_38
  6. Dunning, J. H. (1985). Multinational enterprises, economic structure, and international competitiveness. John Wiley & Sons Inc.
  7. Dunning, J. H. (1988). The investment development cycle and third world multinationals. Transnational Corporations and Economic Development, 3, 135–166.
  8. Engle, R. F., & Granger, C. W. J. (1987). Co-integration and error correction: Representation, estimation, and testing. Econometrica, 55(2), 251–276. https://doi.org/10.2307/1913236
  9. Enimola, S. S. (2011). Foreign direct investment and export growth in Nigeria. Journal of Economics and International Finance, 3(11), 586.
  10. Ethier, W. J. (1986). The multinational firm. The Quarterly Journal of Economics, 101(4), 805–833. https://doi.org/10.2307/1884179
  11. Ethier, W. J., & Markusen, J. R. (1996). Multinational firms, technology diffusion, and trade. Journal of International Economics, 41(1–2), 1–28. https://doi.org/10.1016/0022-1996(95)01411-X
  12. Gebremariam, T. K., & Ying, S. (2022). The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia. Cogent Economics & Finance, 10(1), 2009089. https://doi.org/10.1080/23322039.2021.2009089
  13. Granger, C. W. J. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 37(3), 424–438. https://doi.org/10.2307/1912791
  14. Grossman, G. M., & Helpman, E. (2002). Integration versus outsourcing in industry equilibrium. The Quarterly Journal of Economics, 117(1), 85–120. https://doi.org/10.1162/003355302753399454
  15. Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12(2–3), 231–254. https://doi.org/10.1016/0165-1889(88)90041-3
  16. Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration–with applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52(2), 169–210. https://doi.org/10.1111/j.1468-0084.1990.mp52002003.x
  17. Karimov, M. (2019). The impact of foreign direct investment on trade (export and import) in Turkey. European Journal of Interdisciplinary Studies, 6(1), 6–17. https://doi.org/10.26417/ejis.v5i1.p6-17
  18. Karimov, M. (2020). An empirical analysis of the relationship among foreign direct investment, gross domestic product, CO2 emissions, and renewable energy contribution in the context of the environmental Kuznets curve and pollution haven hypothesis regarding Turkey. European Journal of Formal Sciences and Engineering, 3(2), 23–42. https://doi.org/10.26417/ejef.v4i1.p110-123
  19. Karimov, M., & Belkania, D. (2018). A case study of foreign direct investment and economic growth relationship in Turkey. European Journal of Marketing and Economics, 1(3), 97-101. https://doi.org/10.26417/ejme.v1i3.p97-101
  20. Markusen, J. R. (1984). Multinationals, multi-plant economies, and the gains from trade. Journal of International Economics, 16(3–4), 205–226. https://doi.org/10.1016/S0022-1996(84)80001-X
  21. Markusen, J. R. (1997). Trade versus investment liberalization. NBER Working Paper No. 6231. Social Science Electronic Publishing, 77(35), 339–371.
  22. Markusen, J. R. (2002). Multinational firms and the theory of international trade. MIT Press.
  23. Markusen, J. R., & Venables, A. J. (2000). The theory of endowment, intra-industry and multi-national trade. Journal of International Economics, 52(2), 209–234. https://doi.org/10.1016/S0022-1996(99)00055-0
  24. Metulini, R., Riccaboni, M., Sgrignoli, P., & Zhu, Z. (2017). The indirect effects of FDI on trade: A network perspective. IMT School for Advanced Studies Lucca Working Papers No. 04/2017. http://dx.doi.org/10.13140/RG.2.2.12317.72166
  25. Moosa, I. (2002). Foreign direct investment: Theory, evidence and practice. Palgrave Macmillan. https://doi.org/10.1057/9781403907493
  26. Mukhtarov, S., Alalawneh, M. M., Ibadov, E., & Huseynli, A. (2019). The impact of foreign direct investment on exports in Jordan: An empirical analysis. Journal of International Studies, 12(3). https://doi.org/10.14254/2071-8330.2019/12-3/4
  27. Panic, M., & Joyce, P. L. (1980). UK manufacturing industry: International integration and trade performance. Bank of England Quarterly Bulletin, 20(1), 42–55.
  28. Pesaran, M. H., & Shin, Y. (1995). An autoregressive distributed lag modeling approach to cointegration analysis (Vol. 9514). Department of Applied Economics, University of Cambridge Cambridge, UK.
  29. Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326.
  30. Pesaran, M. H., & Smith, R. P. (1998). Structural analysis of cointegrating VARs. Journal of Economic Surveys, 12(5), 471–505. https://doi.org/10.1111/1467-6419.00065
  31. Phillips, P. C., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335–346. https://doi.org/10.2307/2336182
  32. Savićević, M., & Kostić, M. (2020). The impact analysis of foreign direct investment on export: The case of the Western Balkan Countries. Economic Themes, 58(2), 171–186. https://doi.org/10.2478/ethemes-2020-0010
  33. Selimi, N. (2016). The impact of foreign direct investment on the export performance: Empirical evidence for western Balkan countries. ILIRIA International Review. https://www.academia.edu/77468535/The_Impact_of_Foreign_Direct_Investment_on_the_Export_Performance_Empirical_Evidence_for_Western_Balkan_Countries
  34. Simionescu, M. (2014). The relationship between trade and foreign direct investment in G7 countries a panel data approach. Journal of Economics and Development Studies, 2(2), 447–454.
  35. Solomon, R. F., & Ingham, K. P. (1977). Discriminating between MNC subsidiaries and indigenous companies: A comparative analysis of the British mechanical engineering. Oxford Bulletin of Economics and Statistics, 39(2), 127–138.
  36. Sultan, Z. A. (2013). A causal relationship between FDI inflows and export: The case of India. Journal of Economics and Sustainable Development, 4(2), 1–9.
  37. Sultanuzzaman, M. R., Fan, H., Akash, M., Wang, B., & Shakij, U. S. M. (2018). The role of FDI inflows and export on economic growth in Sri Lanka: An ARDL approach. Cogent Economics & Finance, 6(1), 1518116. https://doi.org/10.1080/23322039.2018.1518116
  38. UNCTAD. (2022). World Investment Report 2022: International tax reforms and sustainable investment.
  39. Zivot, E., & Andrews, D. (1992). Further evidence on the great crash, the oil-price shock, and the unit-root hypothesis. Journal of Business & Economic Statistics, 10(3), 251–270. https://doi.org/10.2307/1391541