Paper Title
Stimulating Economic Growth Through Foreign Direct Investment in Namibia: Evidence from Quarterly Data
Abstract
Capital movements whether in the form of foreign direct investment or foreign portfolio investment are expected
to have a positive multiplier effect on host economies. The study contributes to the empirical literature by investigating
whether foreign direct investment affects economic growth using Namibia as a test centre. Cointegration procedures that
incorporate the following are employed to examine the relationship: Unit root tests, co‐integration tests, estimation of the
long‐run equation, and diagnostic checks for autocorrelation, heteroscedasticity and normality, causality tests, as well as the
forecast error variance decomposition analysis. A quarterly data covering 1990 to 2014 was employed. The results found
cointegrating relationships among the four variables that were investigated. The results also found a certain degree of
positive association between net FDI and growth. Surprisingly, no causality was found between net foreign direct investment
and growth. Real exchange rate and net foreign direct investment contributed more towards innovations in economic growth
during the forecast horizon compared to the openness index. The study concludes by crafting possibilities for further
inquiries.
Keywords- Causality, cointegration, foreign direct investment, long‐run equation