Impact of Cash and Non-Cash Capital Absorption on Economic Growth of Iran

Fotros, Mohammad Hasan; Ahmadvand, Narges

Impact of Cash and Non-Cash Capital Absorption on Economic Growth of Iran

Document Type : Review Article

Authors

Mohammad Hasan Fotros

Narges Ahmadvand

Abstract

Effort to attract‌ foreign‌ capitals is not necessarely an economic weakness. But it is to say that it is a way to stimulate and to promote the production flow of a country, a main chanel of the growth of international trade, technology transfer, job creation, and consequently a way to increase the living standards of any society. This study aims to analyze the effects of foreign investment (direct and indirect) as cash capital absorption and industrial goods importation (high, medium and low -tech industries) as non – cash capital absorption on Iranian economic growth for period of 2001-2012. In this regard, seasonal data have used in an autoregressive distributed lag (ARDL) model to examine the relationship between variables. Results showed a significant negative impact of industrial import and a significant positive impact of foreign investment on Iranian economic growth. Also other variables i.e. capital stock, employment, research and development expenditure and export have had significant positive impact on Iranian economic growth.

Keywords

Foreign Investment

Industrial importation

Transfer of technology

Investments security

Romer endogenous growth model

Bekart, G., & Harvey, C., & Lunblod. (2001)."Financial Intermediation and Growth Causality and Causes", Journal of Monetary Economics, 46(1), 31-77.

Bernstein, J.I. & Mohnen, P. (1998)," International R&D Spillovers between U.S. and Japanese R&D Intensive Sectors", Journal of International Economics, 44(2).315-338.

Borensztein, E., & Gregorio, J., & Lee, J. W. (1998), "How Dose Foreign Direct Investment Affect Economic Growth?" Journal of International Economics.1 (1).235-268.

Borensztein, M. (1998), "Foreign Investment and Spillover Efficiency in Under Developed Economy: Evidence from the Mexician Manufacturing Industry", World Development, 11(1), 493-501.

Coe, D.T., & Helpman, E., & Hoffmaister, A.W. (2008)."International R&D Spillovers and Institutions", NBER Working Paper Series, Access by:http: //www.nber.org /papers /w14069.

De Mello, Jr., & Luiz, R. "Foreign Direct Investment Led Growth: Evidence from time Series and Panel Data". Oxford Economic Paper.

Dieppe, A., & Mutl, J. (2013), "International R&D Spillovers Technology Transfers. R&D Synergies", European Central Bank Working Paper, No. 1504.

Ghatak, A., & Halicioglu, F. (2006), "Foreign Direct Investment and Economic Growth: Some Evidence from Across the World", MPRA Paper, 35(1).63.

Grossman, G.M., & Helpman, E. (1991), "Quality Ladders in the Theory of Growth", Review of Economic Studies, 58(1), 43-61.

Mody, A., & Yilmaz, K. (2002). "Import Machinery for Export Competitiveness".The World Bank Economic Review, 16 (1), 23-48

Pesaran, M.H., & Pesaran, B. (1997). "Working with Microfit4.0: Interactive Econometric Analysis". Oxford: Oxford University Press.

Pesaran, M.H., & Shin, Y. (1996). "Co-Integration and Speed of Convergence to Equilibrium". Journal of Econometrics, 71(1), 43-117.

Rana, Pradumna B., & Dowling, Jr., & Malcolm, J. (1988). "The Impact of Foreign Capital on Growth: Avidence from Asian Developing Countries", The Developing Economics, 26(1), 8.

Romer, P.M. (1990). "Endogenous Technological Change", Journal of Political Economy, 98(5), 71-102.

Saini, A., & Hooklaw, S., & Abdhalim, A. (2010). "FDI and Economic Growth: New Evidence on the Role of Financial Markets". Economic letters, 107(2). 211-213.

Schneider, P. H. (2005), "International Trade, Economic Growth and Intellectual Property Rights: a Panel Data Study of Developed and Developing Countries", Journal of Development Economics. 78(1), Access by: www.elsevier.com/locate/econ base

Shi, V. (2001)."Technological Capital and Internatinal Production Strategy of Firms: The case of FDI in China". Journal of World Business, 1(10), 345-370.

UNCTAD. (1996)." United Nations Conference on Trade and Development, world Investment". Report P.195.

Wang, J., & Blostrom, M. (1990). "Foreign Investment and Technology Transfer: A Simple Model". European Economic Review.

Wang. J. (1990). "Foreign Direct Investment, Financial Development and Economic Growth", Journal of Development Studies, 140(1), 142-163.