Evidence for Gross Domestic Product growth time delay dependence over Foreign Direct Investment. A time-lag dependent correlation study

Journal article


Dhesi, G, Ausloos, M, Kaur, P and Eskandary, A (2019). Evidence for Gross Domestic Product growth time delay dependence over Foreign Direct Investment. A time-lag dependent correlation study. Physica A: Statistical Mechanics and its Applications. 527. https://doi.org/10.1016/j.physa.2019.121181
AuthorsDhesi, G, Ausloos, M, Kaur, P and Eskandary, A
Abstract

This paper considers an often forgotten relationship, the time delay between a cause and its effect in economies and finance. We treat the case of Foreign Direct Investment (FDI) and economic growth, - measured through a country Gross Domestic Product (GDP). The pertinent data refers to 43 countries, over 1970-2015, - for a total of 4278 observations. When countries are grouped according to the Inequality-Adjusted Human Development Index (IHDI), it is found that a time lag dependence effect exists in FDI-GDP correlations. This is established through a time-dependent Pearson ’s product-moment correlation coefficient matrix. Moreover, such a Pearson correlation coefficient is observed to evolve
1
from positive to negative values depending on the IHDI, from low to high. It is "politically and policy "relevant" that the correlation is statistically significant providing the time lag is less than 3 years. A "rank-size" law is demonstrated. It is recommended to reconsider such a time lag effect when discussing previous analyses whence conclusions on international business, and thereafter on forecasting

Year2019
JournalPhysica A: Statistical Mechanics and its Applications
Journal citation527
PublisherElsevier
ISSN0378-4371
Digital Object Identifier (DOI)https://doi.org/10.1016/j.physa.2019.121181
Web address (URL)https://www.sciencedirect.com/science/article/pii/S0378437119307125?via%3Dihub
Publication dates
Print25 Apr 2019
Publication process dates
Deposited04 Jun 2019
Accepted26 Mar 2019
Accepted author manuscript
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Open
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