Abstract:
this study evaluates the causality relationship between human capital and foreign direct investment inflow in twenty-six OIC (the Organization of Islamic Cooperation) countries over the period 1970–2014. We employed the panel Granger non-causality testing approach of Kònya (2006) that is based on seemingly unrelated regression (SUR) systems, and Wald tests with country specific bootstrap critical values. The approach allows one to test for Granger non-causality on each member of panel, separately by taking into account the cross-sectional dependency and slope heterogeneity among countries investigated simultaneously. We found that the hypothesis of Granger non-causality from human capital to foreign direct investment (FDI) was rejected for more than half of the sample countries, mainly among African states. In addition, the effect magnitude of human capital on FDI varies among the states significantly.
Machine summary:
<H1>The Impact of Human Capital on FDI with New Evidence from Bootstrap Panel Granger Causality Analysis</H1> Pegah Sadeghi1, Hamid Shahrestani*2 Kambiz Hojabr Kiani 3, Taghi Torabi4 Received: April 26, 2017 Accepted: June 24, 2017 Abstract his study evaluates the causality relationship between human capitaland foreign direct investment inflow in twenty-six OIC (the Organization of Islamic Cooperation) countries over the period 1970–2014.
We employed the panel Granger non-causality testing approach of Kònya (2006) that is based on seemingly unrelated regression (SUR) systems, and Wald tests with country specific bootstrap critical values.
The approach allows one to test for Granger non-causality on each member of panel, separately by taking into account the cross-sectional dependency and slope heterogeneity among countries investigated simultaneously.
We found that the hypothesis of Granger non-causality from human capital to foreign direct investment (FDI) was rejected for more than half of the sample countries, mainly among African states.
Small sample properties of ∆̃ are improved, using its modified version: �−1�̃−�(�̃��) ∆̃ � = √� ( √�(�̃��) ) (7) (̃��) = ℎ , var(̃��) = 2ℎ(� − ℎ − 1)/(� + 1) Prior to the selecting an appropriate methodology for Granger causality test within panel data framework, we tested cross section dependence and slope homogeneity hypotheses for models (1-1) and (2-1), and prepared the results in Table 1.
In addition to eight African countries, the results from model (2-1) indicated that the Granger non-causality hypothesis between human capital and FDI inflow was rejected also for Pakistan.
Conclusions</H4> In this study, we tested the Granger non-causality hypothesis about human capital and FDI inflow among 26 member states of OIC during the 1970–2014 period.