Foreign Direct Investment, Exchange Rate, and Their Roles in Economic Growth of Developing Countries: Empirical Evidence from Kazakhstan

Journal of International Business Research. Vol. 9, No. 2, pp. 75-90, 2010

23 Pages Posted: 15 Nov 2015 Last revised: 18 Dec 2017

See all articles by Jung Wan Lee

Jung Wan Lee

Boston University - Department of Administrative Sciences

Gulzada Baimukhamedova

Kazakh Academy of Transport and Communications

Sharzada Akhmetova

Republic of Kazakhstan - Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP)

Date Written: October 13, 2010

Abstract

This paper investigates the relationship between foreign direct investment (FDI) inflows, exchange rate, and economic growth of a developing country, and their effects on major economic activities in the nation. This paper examines macroeconomic activity variables of gross domestic product, fixed capital investment, employment ratio, retail trade turnover, industrial production, FDI inflows, and dollar exchange rate as a control variable. The macroeconomic activity statistics of ten calendar years (1997-2006) of Kazakhstan were analyzed by using a multivariate regression model with weighted least squares estimates.

The results indicate that FDI has a minimum or statistically insignificant impact on GDP growth of Kazakhstan. The paper argues that a resource-seeking FDI has a minimal effect on improving the economic growth of developing countries. In other words, the resource-seeking FDI might have a minimal effect on achieving economic growth and national competitiveness of host countries, but not as much as manufacturing-based FDI does. Finally, this paper suggest policymakers of Kazakhstan should consider strategic goals of FDI to maximize its benefits into the economy.

Keywords: foreign direct investment, economic growth, gross domestic product, industrial production, exchange rate, retail trade turnover, employment, multinational enterprises, national competitiveness, Kazakhstan

Suggested Citation

Lee, Jung Wan and Baimukhamedova, Gulzada and Akhmetova, Sharzada, Foreign Direct Investment, Exchange Rate, and Their Roles in Economic Growth of Developing Countries: Empirical Evidence from Kazakhstan (October 13, 2010). Journal of International Business Research. Vol. 9, No. 2, pp. 75-90, 2010. Available at SSRN: https://ssrn.com/abstract=2690485

Jung Wan Lee (Contact Author)

Boston University - Department of Administrative Sciences ( email )

808 Commonwealth Avenue
Boston, MA 02215
United States
617 358 5627 (Phone)
617 353 6840 (Fax)

HOME PAGE: http://www.bu.edu/met

Gulzada Baimukhamedova

Kazakh Academy of Transport and Communications

Shevchenko st., 97
Almaty, 050012
Kazakhstan

Sharzada Akhmetova

Republic of Kazakhstan - Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP)

4 Abai Avenue
Almaty, Almaty 480100
Kazakhstan

Register to save articles to
your library

Register

Paper statistics

Downloads
16
Abstract Views
204
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information