Mohammad I. Elian

Foreign Direct Investment, Financial Development, and Economic Growth: A Cointegration Model

This paper examines causalities among foreign direct investment (FDI), economic growth (GTH), and financial development proxied by both equity market size (EQM) and bank credit to private sectors (BANK). We use a structural cointegration model with a vector error correction (VEC) mechanism to test for the short-term dynamics of the model. The results show that there is a reinforcing causal relationship between FDI and EQM, and between EQM and GTH in the short term, and that these variables cointegrate in the long term. As far as practical implications are concerned, the results reinforce that developed financial markets are an essential precondition for the positive impact of FDI on economic growth, reflecting host countries’ ability to exploit FDI more efficiently. Moreover, the paper provides further substance for the notion that a country with a well-developed financial market gains significantly from FDI inflow.

Exploring the nexus between oil prices and sectoral stock prices: Nonlinear evidence from Kuwait stock exchange

Abstract This paper investigates the relationship between oil prices (Brent and West Texas Intermediate (WTI)) and Kuwait Stock Exchange (KSE) prices at the sector level. In a nonlinear autoregressive distributed lag (NARDL) model, ten major sectors in Kuwait are studied using daily data from 3 January 2000 to 9 December 2015 for some sectors, and 14 May 2012 to 9 December 2015 for others. The findings show asymmetric long run effects between oil prices and some Kuwait sectoral stock prices. For these sectors, the empirical results offer evidence of short run asymmetric effect in case of WTI price measure, but no evidence of asymmetry was found in case of Brent price.

The ethical attitudes of information technology professionals: a comparative study between the USA and the Middle East

This paper aims at investigating comparatively the ethical orientation of information technology (IT) professionals in the Middle East and the United States. It tests for attitudes toward and awareness of ethically-related issues, namely intellectual property, privacy and other general ethical IT aspects. In addition, through a comparison between the two regions, this paper intends to examine whether differences in IT professional demographics and characteristics, including gender and academic level, have any impact on attitudes to business ethics. A ttest is used to establish significant differences between the targeted samples, while an ANOVA F-test is conducted to determine significant differences among the sample countries on a group basis. The results show a general awareness of ethical issues concerning information technology, and no significant differences are found between the two samples. However, different ethical attitudes are reported among respondents in terms of their reactions to the targeted IT ethical aspects. On an individual sample basis, the results about gender support the claim that male and female respondents are different, while mixed results are revealed for the influence of academic level on attitudes towards IT ethics. For intellectual property, the results are significant regarding ethical attitude differences between Middle-Eastern professionals and their counterparts in the US, while no significance differences are reported in terms of privacy.

apital flows and the openness-growth nexus: Toda-Yamamoto causality modeling

This article tests for the causal direct and interactive association between capital inflow, aid and domestic savings, and the trade-led growth nexus within the context of a market-oriented economy. We applied the Toda-Yamamoto (1995) causality test which eludes the shortfalls associated with the standard Granger (1969) causality test. The MWALD results revealed bi-directional causality between aid and growth and between trade openness and growth. One way causality is concluded between aid and openness, where the former Granger causes the latter. The reverse is not correct. As practical implications, the results reinforce that aid and trade openness are predominant conditions for economic growth. Given the shortfall in domestic savings, capital inflow can be motivated by investing in export oriented sectors to have improved competiveness. More innovative mechanisms are needed to increase the contribution of aids towards education and infrastructure. For trade, technical support programs are needed, i.e., building public awareness on trade strategies, assessing periodically the legislations of trade, and upgrading the capacities of local businesses.

Foreign capital inflows and economic growth in developed and emerging economies: A comparative analysis

This paper attempts to test the impact of foreign capital inflow; foreign direct investment (FDI) and foreign portfolio investment (FPI)) on economic growth in developed and emerging economies. It also explores whether this inflow generate synergies in boosting economic growth. A cross-sectional time series growth regression was used for 21 developed and 19 emerging economies sample from 1980 to 2012. The Generalized-Method of Moments (GMM) estimators developed for dynamic models of panel data were used to avoid spurious conclusions and to add robustness and inferences correction to our results, and to deal with the econometric problem of heteroskedastic error of unknown functional form. Analysis revealed mixed results for the sample. For the initial FDI and FPI impact on growth, FDI poses a positive and significant influence, while FPI reveals a negative and significant influence in both samples. In addition, the results on the population proxy support the classical model where higher growth rate of population would initiates economic progress, while the results for the saving growth proxy support the saving-led growth phenomenon; where higher saving rate would accelerate economic growth. It was also found that the Market Capitalization (MC) proxy was positively correlated with economic growth in both samples, while the results of the stock trading proxy indicate that private capital inflows had a positive effect on growth only for the developed economies. The FPI results indicated that the presence of FPI inflows may not be a precondition to produce a positive spillover effect in both sample economies. Interestingly, we observed that the interactions between FPI and the Market Capitalization (MC), Stock Trading, and growth have provided evidence that equity markets advancements do have positive contributions toward attracting more capital inwards to the host country. Analysis also showed that FDI inflows augment domestic resources of most economies, and hence boosting economic growth. As policy implication, governments should be aware that market liberalization polices would have a different influence on inward net capital based on the composition of the capital inflows desired and the level of economic development, reflecting the necessity of capturing a targeted financial market threshold in order to stimulate capital control to attract FDI and FPI. In emerging economies, the interaction term (FPI*MC) implies that catching a threshold of equity market development would have a positive impact on higher levels of capital inflows, hence countries with advanced equity markets tend to gain more welfare from FPI capital inflows.