Global Journal of Economics and Trade

Mediating Role of Foreign Direct Investment in the Relationship between Selected Socio-political Factors and Economic Growth in Kenya, Uganda and Tanzania

Caroline Mwambia Mwangi — 2024-08-10

Aim: The purpose of this study was to analyze the mediating role of foreign direct investment (FDI) in the relationship between the selected socio-political factors and economic growth in Kenya, Uganda and Tanzania.

Methods: A descriptive research design was adopted. The secondary data for the three countries for 41 years from 1975 to 2015 collected from World Bank database was utilized and multi-group path analysis was applied.

Results: The results suggest that human capital development is the main determinant of FDIs with 66% direct effects, 17% indirect effects through FDI and a total effect of 83% on economic growth in the East African region. While ease of doing business and corruption perception together, ceteris paribus, account for only 9.8% of the total changes in the economic growth in the region.

Conclusion: Foreign direct investment was a significant mediator in the relationship between the three social-political factors and economic growth in the three east African countries.

Recommendation: The study recommends that the three East African countries should adopt simpler and better regulations for businesses to make it easier for foreign as well local investors to enter business and trade locally and internationally.

The Multifaceted Impact of Globalization on Vietnam's Development: Economic Growth, Income Distribution, and Cultural Shifts

Đức H Pham — 2024-01-20

Aim: This research examined economic growth, income distribution, and cultural shifts by shedding light on the complexities that define Vietnam's journey in the globalized era.

Methods: The methodology employed for this research was a systematic and comprehensive review of published articles. The initial phase encompassed a search of academic databases, including PubMed, JSTOR, and Google Scholar, using specific keywords and phrases related to the research topic. Rigorous inclusion criteria were established to ensure that selected articles align with the study's specific thematic focus. Subsequently, the synthesized data was organized thematically, facilitating an in-depth analysis of how globalization influences the specified dimensions of Vietnam's development.

Results: The country has embraced international trade, attracting foreign direct investment (FDI) and diversifying its export-oriented economy. The integration into global value chains, especially in manufacturing and technology, has stimulated industrialization and economic diversification. As a result, Vietnam has experienced robust GDP growth, with an average annual growth rate exceeding 6% over the past two decades. However, the reliance on export-oriented growth and integration into global markets has made Vietnam vulnerable to external shocks, as witnessed during the global economic downturns. Managing the balance between export-driven growth, and ensuring resilience to external economic fluctuations remains a key challenge.

Conclusion: The multifaceted impact of globalization on Vietnam's development is a rich and intricate tapestry, weaving together economic growth, income distribution, and cultural shifts.

Recommendations: The government of Vietnam should consider interventions that address disparities in income distribution and create opportunities for marginalized populations to partake in the benefits of economic growth. To maximize the positive impacts of globalization on economic growth, Vietnam should adopt sustainable development strategies such as promoting industries that align with global demands while ensuring responsible resource management and environmental stewardship.

The Relationship between Types of Political Regimes and Income Inequality in Pakistan

Wasiq Ullah Hamdard — 2024-01-21

Aim: Income inequality has emerged as a significant concern within the Pakistani economy, prompting extensive investigations across various dimensions. This study aims to explore the relationship between types of political regime and income inequality, specifically in Pakistan.

Methods: Time series data spanning from 1972 to 2019 were utilized, obtained from the World Bank, Polity IV Project, and the Handbook of Statistics on Pakistan Economy by the State Bank of Pakistan. To measure types of political regimes, the Polity index was employed, while the Gini coefficient served as the metric for income inequality. Additionally, this research considered several factors, including GDP per capita, the ratio of direct taxes to GDP, the percentage of government expenditure on education relative to GDP, and the percentage of government expenditure on community and social services relative to GDP, to control for their direct effects. The stationarity of the data was assessed using the augmented Dickey-Fuller test, while the autoregressive distributive lag (ARDL) model was employed to examine the cointegrating relationship among the variables in the model.

Results: The empirical findings from the estimation demonstrate a lasting negative correlation between the types of political regimes in Pakistan and wealth disparities in the short and medium term. The results highlight the notable detrimental effect of different political regimes on the nation's economic disparity.

Conclusion: A one percent increase in the Polity score is associated with a 0.45 percent long-term and a 0.25 percent short-term decrease in the Gini coefficient.

Recommendation: Pakistan should strive towards a stable democratic political framework and implement sustainable economic policies to effectively address income disparity and achieve a desirable level of income distribution.