IMPACT of TRADE OPENNESS ans FDI on ECONOMIC GROWTH-EMPIRICAL STUDY in FIJI.pdf

1、A number of studies have been undertaken based on analyzing the respective relati on between Trade Openness and Economic Growth as well as that of FDI and Growth.However, the novelty of this research rests on the exertio

2、n of examining the collaborative relation between Trade Openness and FDI with that of Economic Growth based on the empirical study of Fiji; a developing island country in the Pacific. Such a relation has become one o

3、f the most highly regarded issues locally, region ally and globally; and generic across all economies whether Developed, Developing and even Least Developed Countries.The continuous development and promotion of these tw

4、o (2) macro indicators justifies their significance as a platform for the pursuance of develop ment and growth. Given Fiji's economic growth rate trend for the period 1990 to 2010 which has been continuously fluctuat

5、ing and remains less than 10％, undertaking this study is crucial in identifying strategies to improve such growth status via ascertaining its magnitude of relation with Trade Openness and Foreign Direct Investment (FDI).

6、 Notably, such correlation can vary not only in magnitude but also in its direction.Some studies indicate that such relation may be in three(3) forms such that Trade Openness and Foreign Direct Investment may lead to

7、 Growth, they may negatively influence Growth and lastly, Growth may somewhat drive Foreign Direct Investment and Trade.Bearing such possible conclusions, this study is envisaged to highlight the magnitude and direction

8、of relation between Trade and Foreign Direct Investment on Economic Growth. Economic Growth is an increase in a country's real level of national output which can be caused by an increase in the quality of resources,

9、increase in the quantity of resources & improvements in technology or in another way an increase in the value of goods and services produced by every sector of the economy.Foreign Direct Investment is the category of int

10、ernational investment in which an enterprise resident in one country (the direct investor) acquires an interest of at least 10％ in an enterprise in another country (UNCATS, 2010). International trade which occurs as

11、a result of Trade Openness is the exchange of capital, goods and services across international borders or territories.It is one of the most powerful forces affecting the process of economic development. This study en

12、compasses of both theoretical and empirical analysis with the use of respective econometrical tools founded on the STATA 11 software. Theoretically and empirically proven variables integrated are intended to verify

13、and justify such relations and as such, this paper uses GDP growth rate as the Dependent variable with subsequent associated Explanatory variables including Net Exports, Exchange rate, Inflation rate, Inward FDI, Employm

14、ent, Education, Population, Current A/C, ratio of Govt.spending and Domestic Investment. Results indicate that there is negative correlation and negative linear relation between Trade Openness and Economic Growth whi

15、ch can attributed to the country's consistent trade deficit over the period 1990 to 2010.
　　Subsequently, derived outcomes highlight that there is a positive correlation between Inward FDI and GDP growth whilst holdin

16、g the other variables constant. However, there is negative linear relation between GDP growth and Inward FDI. Such negative results warrant the need to consider other crucial controlled variables when carrying out su

17、ch research, hence the inclusion of other relevant indicators as per the model. Results derived have been analyzed objectively with subsequent policy implications, way forward, recommendations and potential key study