The Impact of FDIs Flows on the Nigerien Economic Growth

Transcription

1 Inernaional Journal of Financial Research Vol. 2, No. 2; July 2011 The Impac of FDIs Flows on he Nigerien Economic Growh Ousseini Hamadou School of finance, Shanghai Universiy of Finance and Economics Shanghai , China, Received: May 26, 2011 Acceped: June 29, 2011 doi: /ijfr.v2n2p16 Absrac Niger, since he 70s has always adoped an approach ha makes he IDE a major componen of is developmen plan. I `s so, a series of measures have been aken o make he counry more aracive o Foreign direc invesmen FDI This policy has guaraneed he counry a few annual flow beween he period 1970 o 2008.The aim of his paper is o ry o sudy he impac of FDI on economic growh in Niger. Observe he lieraure sudy on FDI in Niger, however, i is also becoming imporan o see he beween FDI and economic performance since i has no been addressed specifically ye. While i is sill unclear of wheher here is any relaionship beween FDI and economic growh in Niger, especially as regard o he causaliy wihin he relaionship. The heory and he curren empirical lieraure on he relaionship beween FDI and growh have provided ambiguous resuls. Using VAR (Vecor Auoregressive) model, his paper explores he causal relaionship beween FDI and economic growh for he period in Niger. Wih in he Granger causaliy framework, his sudy finds a long-erm relaionship beween FDI and economic growh. This finding is a long-erm relaionship beween variables bu failed o esablish he direc correlaion beween each variable. This can be explained by he fac ha low volume flows of FDI in Niger have major consequences on he economic sysem, paricularly on employmen, inflaion and GDP. More, his weakness is emphasized by he insignificance of he volume of capial flows (domesic and foreign) circulaing in he Nigerian economy and domesic savings. Keywords: Foreign direc invesmen, Spillovers, Human capial, Toal facor produciviy, Opening. 1. Inroducion The volume of Foreign Direc Invesmen (FDI) owards developing counries has increased considerably during he 90s. Ineres in foreign invesmens in developing counries is usually jusified by many expecaions: impac on growh, inflows of financial resources, greaer exposure o inernaional markes (expors, supplies, adapaion o sandards ec.), enhanced produciviy, building of local managemen capaciy and echnology ransfer. Empirical sudies, however, have shown mixed resuls as concerning developing counries. According o he IMF manual of balance of paymens, FDI is defined as a long-erm invesmen reflecing he ineres of a residing eniy of he counry of origin (he direc invesor) in a residing eniy (invesed company) of anoher counry. In oher words, i is an invesmen aiming a securing a long-erm ineres in a company operaing in one economy ha is differen from ha of he invesor. The invesor has a clear ambiion o conrol he managemen of he company. Conrary o porfolio invesmen, he direc invesor here seeks o purchase asses for a period of ime, years for insance, and is willing o influence he managemen of hese asses even a a marginal level in he case of minoriy paricipaion. Given he imporance of FDIs in DCs, is an evaluaion of he level of macroeconomic aggregaes able o allow us o know which channels he effecs of FDIs on economic growh ake in Niger? Economic growh is defined as he long-erm increase of he GNP per capia wihin he naional economy. Facors ha accoun for growh models are: amoun of capial, volume of labour, qualiy of labour (educaion), echnical advancemen and innovaion. Wha are he links beween FDIs and economic growh models? Are FDIs posiively correlaed o differen facors of economic growh? This work seeks o evaluae he conribuion of FDIs on economic growh in Niger. The fundamenal hypohesis we have adoped for his work o analyze he impac of foreign direc invesmen on economic growh in Niger from 1970 o 2008 is he following: he aracion of FDIs in Niger conribue o he expansion of markes in view of creaing new jobs and faciliae economic growh. This said, can we declare ha FDIs and economic growh are relaed? 16

2 Inernaional Journal of Financial Research Vol. 2, No. 2; July 2011 In order o jusify he correlaion beween FDIs flows and he evoluion of economic growh in Niger, we are going o resor o he elecical heory and heories of he endogenous growh. Eclecic heory was developed by Dunning (1981, 1988) and highlighs advanages a foreign firm can enjoy in using a given erriory specific resources (in erms of echnology markeing or organizaion) when hese resources are complemenary o is own asses. In addiion, his paper explores he causal relaionship beween FDI and GDP growh in Niger o help provide en empirical background for policy decision making. And find FDI is a small elemen in he evoluion of GDP, which is consisen wih he resuls of he analysis of shocks. Thus, if in shor-erm FDI have no influence on economic growh in he long erm here may be a muliplier effec from a larger flow of FDI. As GDP is srongly correlaed o he very long erm wih FDI because capial flows generaed by hese invesmens will lead o increased producion and increased producion and increased expors. Employing co inegraion VAR (Vecor Auoregressive) model wih annual daa from period , he sudy find s he relaionship for he long-run beween he GDP and his explicaive variables. This supporive o he governmen of Niger policy o arac FDI ino Niger as one engine of economic growh. This work consiss firsly in a presenaion of he lieraure on FDI (empirical and heoreical sudies), hen a sudy of he acual impac of FDIs on economic growh in Niger hrough an analysis of he evoluion of growh and flows of FDI in Niger. In his analysis, we have highlighed he overall key deerminans of FDI in Niger, daa and mehodology, empirical resul, policy conclusion and implicaion. 2. Lieraure Review on FDI 2.1. Theoreical lieraure Numerous sudies, boh empirical and heoreical, have been devoed o FDIs by economiss who have alked he issue from differen perspecives. While cerain sudies have shown ha FDIs do have posiive impacs on economic growh of he hos counry, some ohers believe ha FDIs are neiher necessary nor sufficien o boos economic growh. Generally speaking, on his issue, we can find wo main rends of hough: he firs one is based on he causaliy beween FDIs and growh and he second on FDIs spillovers in he hos counry. I is imporan o noe ha all hese sudies have serious weaknesses as concerning heir saisic mehods. Some auhors have analyzed invesmen flows beween differen counries and group of counries such as flows beween developed counries and DCs; some ohers have focused on reasons behind invesors decision o delocalize heir producion or inves in oher counries while anoher group has ried o presen differen effecs of FDIs on he hos counry Empirical lieraure Various empirical sudies have ried o deermine he relaion beween hese wo variables. They posi ha capial flows faciliae provision of capial ino he economy, creaing condiions of naional producion and economic growh under specific condiions. These condiions include echnology ransfer which goes hand in hand wih new echnics of producion and TNCs know-how; exporaions for TNCs conribue o he augmenaion of naional producion wih par of i being expored. Our model is close o Zhang s (2001) idea. Here, we used emporal series proper o each counry and carried ou long-erm causaliy ess based on he error correcion model. The resuls have shown long-em relaion beween FDIs and growh in Niger. In sudying he relaion beween FDIs and economic growh in Coe d Ivoire for he periods, Loesse (2005) have found ha FDIs have represened an imporan source of growh. All hings being equal, a poin increase in FDIs received in he counry led o 0.01 increases in per capia GDP growh. The auhor affirms ha invesmen-friendly policies implemened have conribued o he increase of FDIs flows, he overall producion capaciy of he economy and GDP. Carkovic and Levine (2005) fail o find an effec of FDI on growh even afer accouning for dependencies on educaion, domesic finance, or rade. While Andreas (2006), Ndikumana and Verick (2008) and Lumbila (2005) find ha FDI has a posiive significan effec on economic growh, ohers sugges eiher a no significan or a negaive effec of FDI on economic growh (Lougani and Razin 2003; Akinlo, 2004; Ayanwale, 2007; De Mello, 1999) 3. Daa and Mehodology The economeric sudy of he relaionship beween FDI and economic growh in Niger is made from a VAR model (VAR) on annual basis and covers he period from 1970 o 2008 inclusive. The purpose of his economeric sudy is o deermine poenial relaionships of shor and long erms in he sense of Granger beween variables. The VAR model is needed o deec causaliy beween variables in he model. This model is consruced from saisics from he World Developmen Indicaors (WDI, 2010) online Daabases of he World Bank (2010) and ransparency Inernaional daabase online (2010). We are going o presen he model and we analyze he differen resuls obained o verify he working hypohesis. Published by Sciedu Press 17

3 Inernaional Journal of Financial Research Vol. 2, No. 2; July Presenaion of he economeric model The variables of his model are as follows: Foreign Direc Invesmen (FDI), gross domesic produc (GDP), Corrupion Performance Index (CPI) and Macroeconomic Insabiliy Index (IIMACRO) which akes ino accoun he degree of openness of he economy, variaion of exchange raes and inflaion. The sample considered covers 38 observaions. The naural logarihm (log) of each variable was calculaed on e-views o build he model in order o measure he response of a variable following a decrease or increase of anoher. So, hroughou he model, he variables are as follows: FDI, GDP, CPI and IIMACRO Model Formulaion Le wih variables and p lags (denoed VAR ( )). A process VAR (p) o variables can be wrien in marix form: X A A X A X... A p X p (1) Where,, marices unicolonnes o K variables and marix size (K,K) ; is (bb) he whie noise of variance covariance marix. We can sill wrie: 2 p 1 A L A L... A L ) X A ) (2) ( 1 2 p 0 L is he lags operaor and more generally:. Le A(L) = wih A(L)= More formally we say ha if and only if i is a whie noise, and marices such as: Thus, he model can be formulaed as follows: Again where is he ideniy marix and log GDP 0 1 log FDI 2 log IIMACRO 3CPI (3) Firs, we conduc he analysis of ime series hrough saisical ess. This saisical reamen is performed before swiching o he formalizaion of ineremporal adjusmen and deerminaion of he sensiiviy of GDP compared o FDI. The order of inegraion of he series allows o measure levels of saionary variables. This firs sep is o esimae co inegraion relaions on variables of he same order. I allows, in a second ime, incorporaing he specificaion of relaionships co inegraion, o sudy he causal relaionships beween variables hrough he deerminaion of error-correcion model (ECM) Equaions of he model The resuls of he coinegraion relaionship say ha here exis only one relaionship for he long-run beween he GDP and his explicaive variables. Long-Run Equaion: The long-run is as follow: GDP ( 1) FDI ( 1) 0.20IIMACRO( 1) (11) Shor Run Equaions :( for regression able see Annex) The shor-run equaions are as follow: (1) GDP= GDP(-1) GDP(-2)-0.003FDI(-1) FDI(-2)+0.007IIMACRO(-1)-0.018IIMACR O(-2)-0.355CPI 18

4 Inernaional Journal of Financial Research Vol. 2, No. 2; July 2011 (2) (3) FDI= GDP(-1) GDP(-2) FDI(-1) FDI(-2) IIMACRO(-1) II MACRO(-2) CPI IIMACRO= GDP(-1) GDP(-2) FDI(-1) FDI(-2) IIMACRO(-1) IIMACRO(-2)+0.923CPI Since we are dealing wih a log-log model, he coefficiens represen elasiciy. I may be noed in he long-run equaion (11) FDI has a negaive (unexpeced) sign and highly significan (-raio effec on he GDP, while IIMACRO has he righ sign bu i no significan (-raion ). However, in he shor-run for equaion (1) normalized o GDP, when he GDP in he previous year increase by 1%, GDP oday increase o 0.47%, FDI decrease o 0.003%, IIMACRO increase o 0.007% and CPI as exogenous variable decrease o 0.355%. In he equaion (1) exceped for he CPI all he variables are inelasic o GDP and no significan and also saically insignifican (-raio < 2). When he equaion (2) is normalized o FDI, when he FDI in he previous year increase all he explanaory variables oday has he expeced sign excep for IIMACRO. However exceped o GDP all he variables are no saically significan. In he equaion normalized o IIMACRO, when he IIMACRO in he previous year increase all he explanaory variables oday has he expeced sign. However, exceped for GDP all he variables are no saically significan. 4. Analysis of resuls 4.1. Model Esimaion To esimae he economeric model, he heory of co-inegraion has been used for his purpose. I seems efficien o es he relaionships beween sudy variables and empirically validae he resuls obained afer carrying ou he saisical ess applied o he model. Engle and Granger (1987) presened he heory of co-inegraion in which a saionary linear combinaion can be inerpreed as a relaionship of long-erm equilibrium beween he variables sudied. I is his heory which reflecs he fac ha if here is co-inegraion beween a se of variables ( ) over ime, differences of changes in hese variables may exis only emporarily. Usually, he economic variables have he disincion of being inegraed of order 1. They are herefore no saionary in level and have a uni roo bu are saionary in firs difference. Before proceeding o he co-inegraion es developed by Johansen (1991, 1995), oher preliminary seps are necessary o conduc such ess saring wih he uni roo es, deermining he opimal number of delays o incorporae in he model esimae o finally deermine he number of co-inegraing relaionships exising beween he sudied variables Uni Roo Tes The lack of consensus on he relaionship growh / FDI and he role of FDI as a caalys for growh inheren difficulies ha resul from specific facors: echnological sock available for Niger, minimum sock of human capial, insiuional framework and poliical sysem. This heerogeneiy of growh pahs of he Nigerien economy leads o endogeneiy bias and simulaneiy bias in he assessmen of poenial bidirecional causaliy in specific counries. Taking accoun of dependen and explanaory variables wih differen emporal properies increases he risk of spurious resuls in he esimaes (Greene, 1997). To conduc an analysis based on co-inegraion, i should be firs o check wheher he series under sudy are inegraed of order 1. To do his, we use uni roo ess applied o sudy each series (in level and firs difference). The uni roo es is used as one developed by Dickey and Fuller (1981) (DF) and more specially he ADF es (Augmened Dickey Fuller) developed laer. To his end, in order o give he equaion o esimae and judge he saionariy of he series using he ADF es, i would be necessary o iniially esablish he Auoregressive process AR(1) as follows: Y Y U (4) 1 Where is he whie noise. Assuming now he following equaion: The DF es is hen based on he esimaion of he following equaion: Published by Sciedu Press 19

5 Inernaional Journal of Financial Research Vol. 2, No. 2; July 2011 Y Y U (5) 1 Under he following assumpions: H 0 : 0 H 1 : 0 For an order of process > 1, we use he ADF approach o esimae he model AR ( ) as follows: Y Y 1 1 Y 1 2 Y 2... p 1 Y p U (6) Wih se as endogenous variable,,, and he coefficiens o be esimaed. This equaion will be esimaed under he followings assumpions: : Presence of uni roo (non-saionary series) : The series is saionary The decision rule is based on values in Mac-Kinnon. If he observed value exceeds he criical value given by saisics of Mac-Kinnon, we rejec and are kep, ha is o say he series is no saionary. The ess are based h he following relaionships, where Y is he variable of ineres: Y sy 1 i Y i U (7) i 1 Where,(model wihou rend and consan) Y h 0 sy 1 i i 1 Y U (8) i (Model wih consan wihou rend) Y h 0 sy 1 i i 1 i Y U (9) (Model wih consan and rend). In his case we will choose so as o whien he error. The Akaike crierion is used for deerminaion. The assumpions are: Exisence of uni roo Non-exisence of uni roo Saisic: / sandard deviaion nonsandard normal disribuion. Decision rule: if * < (abulaed) we rejec The hree variables are saionary in level Deerminaion of he opimal number of Lag To deermine he order of a VAR model or he opimal number of lags for a VAR (p) and can use several mehods. A sandard procedure is o esimae all models for VAR orders ranging from 0 o a cerain order fixed arbirarily (maximum number of lags for he sample size considered, or maximum number of lags consisen wih a heory or economic inuiion).in pracice, we se a number of delays h said maximum. Then we use informaion crieria o reain he proper order. For each model, we calculae he funcions Akaike (AIC (p)) and Schwarz (SC (p)) as follows: And Where T is he number of observaions, K he number of sysem variables ^ he variance-covariance of he esimaed residuals of he model and ln he naural logarihm. The parameer esimaion of VAR model is based on he number of lags or minimum order of VAR which is deermined from he informaion crieria of Akaike (AIC) or Schwarz (SC). Using he crierion of Schwarz has given us he following resuls in able 2 below: Using he crierion of Schwarz has given us he following resuls in able 2 show ha P=2 will be he number of lags in our model Co-inegraion Tes In he coninuiy of he work of Aresis and Demeriades (1997), we op for he approach of co-inegraion o analyze he role of FDI on growh, he impac of he index of macroeconomic insabiliy and he corrupion performance index on hese hree variables in a conex of high risk counries such as Niger policy. Wih variables inegraed in level, i is o 20

6 Inernaional Journal of Financial Research Vol. 2, No. 2; July 2011 idenify long-run equilibrium relaionships beween he rae of GDP growh o FDI variables, he index of macroeconomic insabiliy and he corrupion performance index. The co-inegraion es is known as ha of Johansen (1991, 1995). Indeed, he resul of he esimae gives he resul of co-inegraion es based on he number of Eigen vecors (Eigen values) and ordered on he value of he likelihood raio (LR) by calculaing he following Johansen saisics: n Q T ln( 1 i) (10) r i r 1 Where T: numbers of observaions : The larges Eigen values : No coinegraion relaionship : Presence of a leas one coinegraing relaionship beween he series. On he basis of criical values a he 5% and 1% ha i acceps or rejecs. Indeed, if he LR saisic exceeds he criical daa values a he 5% and 1%, we rejec and is acceped and i is said ha here is a leas one co-inegraing relaionship beween he series sudied. The es carried ou in co-inegraion model has hree assumpions (Appendix IV, Figure2) explaining he relaionship beween variables. Assumpion of no relaionship beween he variables (none) Since he value of he race is grea han he calculaed value (62.94 > 54.07) denoes rejecion of he assumpion a he 0.05% level and accep he hypohesis ha exis a co-inegraion relaionship beween he variables. Assumpion a leas one co-inegraion relaionship beween variables ( a mos 1) Since he value of he race is less han he value calculaed a 5% (34.07<35.19), we rejec he hypohesis of exisence of a leas wo co inegraing relaionships beween variables. So we can conclude ha here is no co-inegraion Assumpion a leas wo co-inegraions relaionship beween variables ( a mos 2) Since he value of he race is less han he value calculaed a 5% (15.15<20.26), we rejec he hypohesis of exisence of a leas wo co-inegraing relaionships beween variables. So we can conclude ha here is no co-inegraion. Thus we can conclude ha here exiss one co-inegraion relaionship beween he variables The Impulse Response analysis Consider a process wih saisfacory represenaion VAR ( ) as follows: F ( L) X X F X F X... Fp X (12) p Assume ha he innovaions are i.d, and one has achievemens of his process. Assume furher ha parameers are known, bu he same analysis can be conduced when here has only esimaors of hese parameers. Then we can express he general idea of evoluion of a componen which occurs afer a pulse on on he period ; assuming all oher variables is consan for. Thus he impulse response analysis or impac analysis is o sudy or o measure he impac or he effec of he variaion of he innovaion variables. The analysis reveals ha impulse responses of he FDI o shock of he GDP are posiive in he early and in middle period end o be negaive and hereafer become posiive bu wih a low ampliude. While he impulse responses of he FDI o shock of he IIMACRO are low and negaive. However he flows of FDI have a posiive influence on he IIMACRO in he way i conribues o decrease he rae of IIMACRO. The responses of he GDP response o shocks of FDI are high and posiive. The responses of he GDP responses o shocks IIMACRO are negaive in he early and afer end oward zero. These mean ha in he early he GDP is influenced by he flows of FDI. The responses of he IIMACRO responses o shocks of FDI and o GDP are boh posiive bu very low in he early and end oward zero. This means ha he rae of IIMACRO has a small influence on he FDI and GDP. (Appendix 2 figure 4). Published by Sciedu Press 21

7 Inernaional Journal of Financial Research Vol. 2, No. 2; July Decomposiion of he variance The sudy of he variance decomposiion allows complee analysis of shocks. The objecive is o calculae he conribuion of each innovaion o he variance of he forecas error. The resuls of variance decomposiion show ha he variance of forecasing FDI is due o 68 % of is own innovaions, 29.20% of hose of he GDP and 2.79%of hose of IIMACRO. The variance of GDP forecas is due o 86.10% of is own innovaions, 13.82% of hose of he FDI and 0.07% of hose of IIMACRO. The variance of IIMACRO forecas is due o 91.35% of is own innovaions, 1.87% of hose of he FDI and 6.77% of hose of GDP. In summing up, he resuls say FDI is a small elemen in he evoluion of GDP, which is consisen wih he resuls of he analysis of shocks. Thus, if in shor-erm FDI have no influence on economic growh in he long erm here may be a muliplier effec from a larger flow of FDI. As GDP is srongly correlaed o he very long erm wih FDI because capial flows generaed by hese invesmens will lead o increased producion and increased producion and increased expors Granger causaliy es The es of Granger causaliy is used o deermine which ype is he correlaion of he indicaor wih he reference series. I involves comparing he average squared errors (EMC) o predic he nex value of a series using wo alernaive forecasing mehods: one using only shifs he series o predic and he second using shifs he series o be se and hose of he series ha we es causaliy. For linear models, Granger causaliy is rejeced if: ECM E( X / X, X,...)] ECM [ E( X / X, X..., Y, Y,...] (13) [ s 1 S 1 1 Where Y is he variable ha we es he causal X. The quesion is wheher he variable X "cause" or no he variable Y. They say ha he variable x because he sense of Granger variable Y if and only if knowledge of he pas of X improves he forecas of ye any horizon. If he null hypohesis is rejeced, he es will say ha he series will cause by Granger X, ha is o say, i conains informaion ha can predic he movemens of X, and vice versa performing he same es in reverse. If one seeks o consruc an indicaor o predic he movemen of a reference series, hopefully ideally be deermined by his es ha he change in he indicaor above hose of he reference series and no he oher, so ha Granger causaliy exiss only in he expeced direcion. 5. Furher Analysis of he Empirical Resuls The VAR model used in he work is o provide efficien sysems of inerrelaed ime series and o analyze he impac of FDI on economic growh. The VAR approach requires srucural modeling by modeling each endogenous variable in he sysem as a funcion of lagged values of all oher endogenous variables in he sysem based on he resuls obained. The analysis resul of he model is focused on esing causaliy Granger Empirical resuls of he model The analysis of causaliy in Granger sense, are usually based on a specificaion auoregressive (VAR) process daa generaor. This applies especially o he many sudies of causaion beween FDI and growh a he macroeconomic level. The variable FDI and economic growh have he advanage of being presen in a naural order saring wih linear consrains. This new characerizaion faciliaes a sequenial esing procedure which can ofen lead o conclusions abou causaliy (in Granger sense). The es of Granger causaliy analysis applied o mulivariae auoregressive deermines wheher an endogenous variable could be considered an exogenous variable. I also shows he degree of relevance of some variables o improve he prognosis of some ohers. The resuls of his es, he equaions of FDI reveals he imporance of lagged values of GDP and IIMACRO for improving forecass of FDI generaed by he model. In oher words, he lagged values of hese variables cause he presen value of FDI. The same scenario for he equaions of GDP, lagged values of FDI and IIMACRO values could explain he presen GDP, while i is differen for variable IIMACRO, migh be considered an exogenous variable. Table 4 shows ha here is no relaionship Granger causaliy beween all he variables sudied. Unlike some sudies in he above work and have been made for some developing counries, FDI does no cause economic growh (in he sense of Granger) in he case of Niger for he period 1970 o GDP real growh rae included in he work o reflec changes in economic growh does no cause as FDI (since F-sa=3.82and Prob=0.03). 22

8 Inernaional Journal of Financial Research Vol. 2, No. 2; July 2011 As used saisical heory requires saionariy of daa, we modeled he naural logarihm of each of hese variables differeniaed once or wice as needed. The vecor of hese variables and seleced is: 2 ln 2 X [(1 L)ln( FDI ),(1 L) ( IIMACRO ),(1 L) ln( GDP )] (14) Therefore, variables lnfdi, lngdp and lniimacro designae he processed forms of hese variables as hey appear in he vecor and he causal relaionships are idenified (in he sric sense) be inerpreed as linking hese ransformed variables. Therefore, FDI should be inerpreed as he rae of growh his year, while GDP or is growh rae and IIMACRO correspond o changes in heir respecive growh raes. I is also noeworhy ha he variable IIMACRO does no direcly affec GDP in he model bu i has an indirec influence on i since i causes he FDI. So, his influence hrough he channels of ransmission of FDI is regarded as an effecive vehicle for caalyzing economic growh. 6. Policy Implicaion In order o opimize he impac of he relaionship beween FDI and economic growh in Niger, some policies implicaion can be considered for furher generaing economic growh and aracing FDI in Niger: Managing macroeconomic sabiliy o achieve susainable economic growh. Improving invesmen climae and increasing absorpion capaciy, raional exploiaion of mineral resources in creaing value-added exploraion of oher sources of growh (ourism, livesock by-producs, crafs...). 7. Conclusion Using Co-inegraion VAR (Vecor Auoregressive) Model, his sudy explored he relaionship beween FDI and economic growh impac o he period ; finding FDI is a small elemen in he evoluion of GDP, which is consisen wih he resuls of he analysis of shocks. Thus, if in shor-erm FDI have no influence on economic growh in he long erm here may be a muliplier effec from a larger flow of FDI. As GDP is srongly correlaed o he very long erm wih FDI because capial flows generaed by hese invesmens will lead o increased producion and increased producion and increased expors. In he case of Niger,his sudy op for he approach of co-inegraion relaionship o analyze he role of FDI on growh, he impac of he index of macroeconomic insabiliy and he corrupion performance index on hese hree variables in a conex of high risk counries such as Niger policy. Wih variables inegraed in level, i is o idenify long-run equilibrium relaionships beween he rae of GDP growh o FDI variables, he index of macroeconomic insabiliy and he corrupion performance index. For he fuure research,he sudy could be expanded o he robusness of hese resuls deserve o be verified by including in he regressions a breakdown of FDI by heir naure and objecives and he differen economic secors in Niger. References Backer,K.D.E, (2002),Does Foreign Direc Invesmen Crowd Ou Domesic Enrepreneurship Vlerick working paper, No.14. Baldwin, R.E., Braconier, H. & Forslid R. (1999), Mulinaionals, Endogenous Growh and Technological Spillovers: Theory and Evidence. Discussion Paper N 2155, Cener for Economic Policy Research, London, UK. Baliamoune, M. (2002), Assessing he Impac of One Aspec of Globalizaion on Economic Growh in Africa, WIDER Discussion Paper No. 2002/91, World Insiue for Developmen Economics Research of he Unied Naions Universiy, Helsinki. Bergsrand, Jeffrey H. & Peer Egger. (2004) A Theoreical and Empirical Model of Inernaional Trade and Foreign Direc Invesmen wih Ousourcing: Par I, Developed Counries, Mimeo. CHARVIN, Rober, l invesissemen inernaional e le droi au développemen, Ediion L Harmaan, 2002, 203 pages. Chen, C., Chang, L. & Zhang, Y. (1995). The role of foreign direc Invesmen in China s pos-1978 economic developmen, World Developmen, 23(24): , doi: / x(94)00143-m, hp://dx.doi.org/ / x(94)00143-m CNUCED (2005), World Invesmen Repor, De Mello, L.R. (1997), Foreign Direc Invesmen in Developing Counries and Growh: A Selecive Survey, Journal of Developmen Sudies, 34, 1-34, doi: / , hp://dx.doi.org/ / De Mello, L.R. (1999), Foreign Direc Invesmen-led Growh: Evidence from Time Series and Panel Daa, Oxford Economic Papers, 51, , doi: /oep/ , hp://dx.doi.org/ /oep/ Published by Sciedu Press 23

9 Inernaional Journal of Financial Research Vol. 2, No. 2; July 2011 Dunning, J. H. (2001), The Eclecic (OLI) Paradigm of Inernaional Producion: Pas, Presen and Fuure, Inernaional Journal of Economics of Business, Vol. 8, No. 2, doi: / , hp://dx.doi.org/ / Dunning, J. H., (1998), The Eclecic Paradigm of Inernaional Producion: A Resaemen. and Some Possible Exensions, Journal of Inernaional Business Sudies-Spring, 1998, 3-4. Merlevede, Bruno e Koen Schoors (2004), Deerminans of Foreign Direc Invesmen in Transiion Economies, unpublished R Developmen Core Team (2008). R: A Language and Environmen for Saisical Compuing. Vienna, Ausria: R Foundaion for Saisical Compuing. ISBN STIGLITZ, Joseph E., Principes d économie moderne, nouveaux horizons, De Boeck Universié, 2000, 939 pages. Wang, Z. Q. & Swain, N., (1995), The Deerminans of Foreign Direc Invesmens InTransforming Economics: Empirical Evidence from Hungary and China. Welwirschafliches Archive. 131: , doi: /bf , hp://dx.doi.org/ /bf Xiaoying, L. & Xiaming, L., (2005), Foreign Direc Invesmen and Economic Growh: An Increasingly Endogenous Relaionship, World Developmen, vol. 33, Issue 3. Zhang, K. H. (2001), Does foreign Direc Invesmen promoe Economic Growh? Evidence-from Eas Asia and Lain America, Conemporary Economic Policy (ISSN 1074-) Table 1. Uni Roo Tes variables consan Consan& Trend None levels levels levels GDP ** ** ** ** FDI ** ** ** ** ** ** IIMACRO ** ** ** ** ** ** Noes: 1. using criical values by MacKinnon, *indicaes saionariy a5%level and ** indicaes saionariy a 1% level 3. Lag lengh auomaically chosen (by Eviews 6) using Schwarz Informaion Crierion (SIC) Table 2. Choice of he Opimal Lags Crierion P=2 P=4 P=6 informaion SC

10 Inernaional Journal of Financial Research Vol. 2, No. 2; July 2011 Table3. Coinegraing Regression Coinegraing Eq: CoinEq1 GDP(-1) FDI(-1) ( ) [ ] IIMACRO(-1) ( ) [ ] C Noe: Sandard errors are in parenhesis and -raios are in brackes. Table 4. Granger Causaliy Tes Pairwise Granger Causaliy Tess Dae: 09/26/10 Time: 19:26 Sample: Lags: 2 Null Hypohesis: Obs F-Saisic Prob. FDI does no Granger Cause GDP GDP does no Granger Cause FDI CPI does no Granger Cause GDP GDP does no Granger Cause CPI IIMACRO does no Granger Cause GDP GDP does no Granger Cause IIMACRO CPI does no Granger Cause FDI FDI does no Granger Cause CPI IIMACRO does no Granger Cause FDI FDI does no Granger Cause IIMACRO IIMACRO does no Granger Cause CPI CPI does no Granger Cause IIMACRO Pairwise Granger Causaliy Tess Dae: 09/25/10 Time: 12:37 Sample: Lags: 2 Null Hypohesis: Obs F-Saisic Prob. Published by Sciedu Press 25

11 Inernaional Journal of Financial Research Vol. 2, No. 2; July 2011 GDP does no Granger Cause FDI FDI does no Granger Cause GDP IIMACRO does no Granger Cause FDI FDI does no Granger Cause IIMACRO CPI does no Granger Cause FDI FDI does no Granger Cause CPI IIMACRO does no Granger Cause GDP GDP does no Granger Cause IIMACRO CPI does no Granger Cause GDP GDP does no Granger Cause CPI CPI does no Granger Cause IIMACRO IIMACRO does no Granger Cause CPI Pairwise Granger Causaliy Tess Dae: 09/25/10 Time: 12:56 Sample: Lags: 2 Null Hypohesis: Obs F-Saisic Prob. FDI does no Granger Cause GDP GDP does no Granger Cause FDI IIMACRO does no Granger Cause GDP GDP does no Granger Cause IIMACRO IIMACRO does no Granger Cause FDI FDI does no Granger Cause IIMACRO