The nexus prevalent in nonlinear finance and growth in the presence of macroeconomic instability in Turkey: Does the stock market really matter?

This article [written by Emrah Gulay] – published in Business and Economic Horizons, Volume 15(1), 2019.

Title: The nexus prevalent in nonlinear finance and growth in the presence of macroeconomic instability in Turkey: Does the stock market really matter?

Abstract: The link between stock market and economic development has become a significant volatile issue over the past few years. Our major contribution in the debate concerning the nexus between finance and growth is to bring to the fore the asymmetric effects of stock market development on economic growth under macroeconomic instability. Hence, towards this purpose, the stock market development index and the macroeconomic instability index, which are both constructed by incorporating the exchange rate and unemployment rate, are built based on principal component analysis. Utilizing the nonlinear autoregressive distributed lag model (NARDL) within the framework of a time series approach, we provide evidence that there is an asymmetric relationship between economic growth and the development of the stock market in Turkey.

Keywords: Financial development, stock market, economic growth, macroeconomic instability, nonlinear ARDL model

Citation: Gulay, E. (2019). The nexus prevalent in nonlinear finance and growth in the presence of macroeconomic instability in Turkey: Does the stock market really matter? Business and Economic Horizons, 15(1), 1-19. http://dx.doi.org/10.15208/beh.2019.1

 

An analysis of the relationship between foreign direct investment (FDI), political risk and economic growth in South Africa

This article [written by Daniel Francois Meyer, & Thomas Habanabakize] – published in Business and Economic Horizons, Volume 14(4), 2018.

Title: An analysis of the relationship between foreign direct investment (FDI), political risk and economic growth in South Africa

Abstract: A country’s political stability and trends in economic growth are important factors to attract foreign investment. Most developing countries struggle to achieve political stability and high levels of growth. Due to these issues, developing countries attract limited foreign investment. Applying the Bounds test for cointegration, an ARDL model was utilized using time series data from 1995 to 2016, this study examined the potential impact of political risk and gross domestic product (GDP) on foreign direct investment (FDI) flows to the South Africa. Findings of the study revealed that in both short and long run, political risk and economic growth affect the level of foreign direct investment. The political risk rating was found to have a higher impact on FDI flow if compared to GDP. The lower the political risk level (resulting in a highly rated index), the higher the level of FDI inflows. Using the Granger causality approach, empirical results indicated a bi-directional causal relationship between FDI and economic growth, while it was found that political risk causes changes in FDI. In other words, individually, political risk and gross domestic product cause changes in FDI. Based on the study findings, it is imperative for the South African government to reduce the level of political risk in order to increase foreign investment into the country which, in return, could assist in economic growth and welfare.

Keywords: ARDL model, economic growth, foreign direct investment, political risk, South Africa

Citation: Meyer, D. F., Habanabakize, Tho., 2018. An analysis of the relationship between foreign direct investment (FDI), political risk and economic growth in South Africa. Business and Economic Horizons, Vol.14, Issue4, pp.777-788. DOI: http://dx.doi.org/10.15208/beh.2018.54