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Spillover effects of trade and foreign direct investment on economic growth: an implication for sustainable development

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Abstract

This paper explores the advantages of international trade and foreign direct investment (FDI), which can be the main factors of transferring technology to economies. More specifically, it seeks the importance of international trade and FDI as the main channels of technology transfer between countries either in a region or at the international level. In this context, relevant spillovers arising from trade and FDI play important roles in achieving economic growth, capital accumulation and economic well-being, providing a path for sustainable development. The main goal of this paper is thus to investigate the possible implementation of regional economic through cooperation in trade and investment in a region such as the Economic Cooperation Organization (ECO). Accordingly, the country members can benefit from spillover effects on their economic growth, as a major factor to appoint sustainable development. The relevant methodology relies on estimation of a panel economic growth model in which we have used the obtained empirical results to assess the effects of trade and FDI spillovers on economic growth over the period 1995–2018. The empirical results have indicated significantly positive effects of the spillovers on economic growth of the ECO country members, as the case study, implying sustainable growth in the long run.

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Notes

  1. The region includes Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan.

  2. By definition, \({K={k}_{1}+k}_{2}\)

  3. According to our case study, individuals refer to the selected ECO member countries including Iran, Kazakhstan, Kyrgyz, Pakistan, Tajikistan and Turkey, based on the availability of data.

  4. https://databank.worldbank.org/reports.aspx?source=2&series=NY.GDP.MKTP.CD&country=. 

  5. https://en.wikipedia.org/wiki/Economic_Cooperation_Organization.

  6. https://www.isi-web.org/capacity-building/developing-countries.

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  1. University of Isfahan, Isfahan, Iran

    Zahra Zamani & Seyed Komail Tayebi

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  1. Zahra Zamani
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Zamani, Z., Tayebi, S.K. Spillover effects of trade and foreign direct investment on economic growth: an implication for sustainable development. Environ Dev Sustain 24, 3967–3981 (2022). https://doi.org/10.1007/s10668-021-01597-5

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