Research Paper on Foreign aid, foreign direct investment, panel data, Granger causality, VAR model, gravity model, system GMM

Description

Title: Foreign aid, foreign direct investment, panel data, Granger causality, VAR model, gravity model, system GMM

Abstract: Weak regulatory performance is contributing to the economic slowdown in upper-middle-income economies (UMIE). This problem causes a slow increase in private sector participation, which limits the potential for greater economic growth. The government’s role at this crucial time is to inject money into economies in the hopes that growth can be accelerated and sustained for a long time. However, increasing financial support through borrowing from external debt exposes economies to precarious situations. Determining how regulatory performance influences economic growth and modifies the debt-growth relationship in UMIE was the goal of this study. The generalized method of moments (GMM) was used as an estimation method for 32 countries between 2004 and 2020, and it was discovered that regulatory performance has a negative impact on economic growth. Additionally, it is anticipated that public debt will accelerate UMIE’s economic growth as regulatory performance improves. These results are novel because they offer compelling justification for the necessity of enhancing UMIE’s regulatory performance. Weak regulatory performance may force a government to act as the main driver of growth rather than the private sector, which would have a negative impact on UMIE’s growth rate due to debt. These findings have a number of policy ramifications, particularly in terms of streamlining the regulatory process and enhancing performance in UMIE. This study could be expanded by future researchers by contrasting the findings from various economies or nations.

Keywords: external debt; economic growth; regulatory performance; marginal effects; GMM

Paper Quality: SCOPUS / Web of Science Level Research Paper

Subject: Economics

Writer Experience: 20+ Years

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