foreign direct investment in sri lanka pdf
211315643
Impact of macroeconomic variables on foreign direct investment in Sri Lanka
The title of this study is "Impact of macroeconomic variables on FDI in Sri Lanka" This research investigates to find the connection between FDI and exchange rate, classify the relationship between FDI and exports, recognize the relationship between FDI and interest rate and identify the relationship between FDI and consumer price index. The variable in the conceptual model such as interest rate, exchange rate, consumer price index, exports have been taken as independent variables and FDI has been taken as dependent variable. Gathered data from 1980 to 2016 collected from Central bank annual reports. Descriptive statistics and regression modeling using SPSS 20.0 software package for the purpose of analyzing the data collected. To find out the relationship between FDI and macroeconomic variables, regression analysis was carried out. Results of regression analysis reveal that; the P value of all independent variables are less than 5% These values prove that there is a significant relationship between FDI and macroeconomic variables. According to the data of this research, The R Square value is 0.942. Which means 94.2% of the variation in FDI can be explained by interest rate, consumer price index, exchange rate, and exports. Whereas 5.8% is explained by other variables outside the model. And also, there is no autocorrelation between the error terms. Durbin Watson statistic is 1.952 which is almost near to value of 2. As per the statistically output, taking necessary actions on improvement in infrastructure facilities Sri Lanka from the all aspects implementing foreign trading policies to increase the direct and indirect investment, plans for developing new technology. Tax benefits on transportation and trade sector, reducing visa constraints on the movement of people are some of the policies Sri Lanka can adopt to enhance the foreign investment.
S M P Senanayake A M M Mustafa
211762467
Macroeconomic Impact of Foreign Direct Investment in Sri Lanka
This research is aimed at tracing the impact of Foreign Direct Investment (FDI) in promoting macroeconomic variables such as gross domestic production, industrial production, total domestic investment, exports, imports, Board of Investment approved exports, Board of Investment approved imports and Board of Investment approved employments by using the time series annual data for 1978 2018 in Sri Lanka. Multiple Regression Analysis was used to estimate the impact of FDI on selected macroeconomic variables. Estimation method was Ordinary Least Squares. EViews 10 software were used for data analysis. The empirical evidence shows that there is a statistically significant positive impact of FDI on selected macroeconomic variables except in the case of imports. However, this study further reveals that the actual impact on macroeconomic variables can be felt after certain time lag. But the impact on total domestic investment was realized immediately. Further, this research has identified various problems faced in attracting FDI including ideal sector identification and the appropriate recommendations have been presented in order to realize the major benefits from FDI inflow into the country.
International Journal of Recent Technology and Engineering
A M M Mustafa
189989578
The Relationship between Foreign Direct Investment and Inflation: Econometric Analysis and Forecasts in the Case of Sri Lanka
There are several reasons why the dynamic interaction between FDI and inflation must be studied. First, Foreign Direct Investment is found as one of the important determinants of the process of economic growth and development of Sri Lanka. Therefore, the literature empirically examining the causal relationship between the inflation and FDI is significant because the rate of high inflation affects the inflows of FDI inflows into the economy of Sri Lanka and slows down the process of economic growth and development. The main objective of this study is to examine the linkages between FDI and inflation in Sri Lanka for the time periods from year 1978 to year 2017. The dependent variable of the model used in this study is Inflation and the independent variable of the model is FDI (Foreign Direct Investment) The data used in the model are the annual time series collected from Annual Report of Central Bank of Sri Lanka. The tools to analyze the data are graphical representation, Johansen Co integration test, simple regression model, Residual Analysis, Stability Test, and Granger Causality Test. A long run relationship is found between the variables. The dependent variable: INF Inflation is inversely related with the independent variable: FDI Foreign Direct Investment. One way causal relationship from FDI to INF is ensured. The forecast sample is ranged from 2009 to 2017. The simple regression model affirms the significant impacts of the FDI Foreign Direct Investment on the INF Inflation. The forecasting model derived from the simple regression model is rather incompatible to forecast the value of dependent variable (Inflation)
Journal of Politics and Law
A M M Mustafa
159174515
Stock Market Performance, Exchange Rate Volatility and Foreign Direct Investment to Sri Lanka
This study investigated the impact of exchange rate volatility and stock market performance on the inflow of foreign direct investment to Sri Lanka using quarterly data from 2004 to 2018. The ordinary least square technique and error correction mechanism was used in estimations. Empirical results suggested that FDI is significantly correlated with the exchange rate volatility. Therefore, monetary and fiscal policy measures are required to reduce budget deficit, trade gap and debt ratios in order to maintain a stable exchange rate. Further, findings indicated long run uni directional causality from Stock Market to FDI while there is no short term relationship between the two variables. If the stock market is developed and foreigner participation can be increased then that will motivate FDI inflows to the country. This implies that policy makers must aim at developing the stock market for a resulting increment in FDI flows to the country.
Asia Proceedings of Social Sciences
Champa Rupani Rajapakse
216650941
Determinants of foreign direct investment of infrastructure industry in Sri Lanka
The objective of this study is to identify influential factors which affect the attractiveness of inward foreign direct investment (FDI) of infrastructure sector in Sri Lanka. Foreign direct investment is one of the main components of the development of a country. Through FDI, new technologies, new capital goods and human capital development programs can be obtained. Even though attracting foreign investors to the developing country is relatively difficult. Though Sri Lanka is top compared to India, Pakistan and Bangladesh, which have relatively poor index value still, Sri Lanka is behind in attracting FDIs in South Asian region, according to "Ease of doing business index" With that background, this empirical study tried to identify what are the determinants which effect on inward foreign direct investment in Sri Lanka. For convenience, the research area was narrowed down and limited to infrastructure related industries. Primary data was collected through questionnaires using Likert scale including firms operate in Telecommunication, Port Services and Construction sectors of infrastructure industry. The importance of each selected factors (market size, level of transportation facility, level of telecommunication facility, economic growth, civil war existed in the country, cultural distance, geographical position, political stability, government assistance and changes made in imposed barriers on imports) were analyzed. Test and effect from each variable on the attractiveness of FDI were tested. The results obtained from the SPSS software, seven factors out of selected ten factors have shown an effect on the attractiveness of FDI in Sri Lanka. They are market size, level of transportation facility, level of telecommunication facility, economic growth, and civil war existed in the country, cultural distance and geographical position. The rest of the factors (political stability, government assistance and changes made in imposed barriers on imports) do not show effect on the FDI attractiveness. As the recommendations, government should involve in regional development such as transportation and telecommunication facility. Also, it is necessary to implement new trade agreements.
M H V S S Gunathilaka A M M Mustafa
214497735
Impact of foreign direct investment, money supply, exchange rate and international trade on economic growth in Sri Lanka: an econometric analysis
This study is to find out the impacts of macroeconomic variables such as foreign direct investment, money supply, international trade, and exchange rate after open economy policy and to analyze the long run relationship between these variables. The time series data of the variables such as economic growth rate, foreign direct investment, money supply, exchange rate, and international trade from 1977 2017 have been collected from Central Bank of Sri Lanka, World Bank Data Base, the Department of Census, and Web sites. To analyze the date, the statistical software, EVIEWS 7 is used. Augmented Dickey Fully Test (ADF Test) multiple Regression, Multi colineartity test, Series correlation test, Johansen Test, Autocorrelation, Heteroscedasticity test are the tools used to analyze the data. All the variables used in this study are stationary. As per Model 1, foreign direct investment and money supply are significant to determine the economic growth. Accordingly, the changes by one million in foreign direct investment and money supply lead to change economic growth by 83.02 million and 70.46 million respectively. These variables influence on the economic growth by 90 percent. As per Model 2, there is a positive relationship between the dependent variable of economic growth and independent variables such as foreign direct investment, money supply, exchange rate, and international trade. These variables influence on economic growth by 93 percent. In addition, there is a long run relationship between these variables and the economic growth.
G Neerthana Sinnathurai Vijayakumar
201377819
Tourism and Foreign Direct Investment Inflows in Sri Lanka
This article examines the relationship between tourism and foreign direct investment (FDI) and the factors that enhance tourism in Sri Lanka using data over the years 1978 2015, under a vector autoregressive framework. The results reveal that there is a significant long run equilibrium relationship between tourism, and a number of variables such as FDI, exchange rate, tourism price and civil war of the country. The results also reveal that there exist unidirectional causal relationships from FDI to tourism and tourism price to tourism, in both the long run and the short run. In light of this finding, it is recommended that Sri Lanka should introduce policies that would increase FDI inflows into the tourism industry and maintain a competitive tourism price to attract more tourist arrivals. JEL: C32, F19, F41, O53
South Asia Economic Journal
Kalaichelvi Ravinthirakumaran E Antony Selvanathan Saroja Selvanathan Tarlochan Singh
203470691
Contribution of Tourism and Foreign Direct Investment to Gross Domestic Product: Econometric Analysis in the case of Sri Lanka
This study employs time series annual data for the period from 1978 to 2017 to evaluate the contribution of foreign direct investment (FDI) and tourism industry (TR) to Sri Lanka's Gross Domestic Product (GDP) Sri Lanka's liberalization and deregulation policies put into effect in 1977 have attracted a huge volume of foreign direct investments into the country. However, the protracted civil war affected the country's economic base and resulted in poor performance. Recently a more conducive environment has been established after the three decade long ethnic war came to an end. In this context, the Sri Lankan government has taken positive measures to attract foreign direct investment and boost tourism in the country. This study intends to evaluate the contribution of foreign direct investment (FDI) and tourism industry (TR) to the Gross Domestic Product of Sri Lanka, as these two factors are considered to be very effective at increasing the GDP of a country. Unit root test was done on the variables and the method chosen was the Augmented Dicky Fuller (ADF) test. Co integration analysis was used for the long run relationship and the Granger causality test was performed to investigate the causal relationship. The empirical study shows that there is a positive and statistically significant relationship between the variable's TR and FDI to the GDP in the long run. Results of Granger causality test implied that the two way causality promoted the economic growth of Sri Lanka. E Views 9 econometrics software was used for the time series data analysis.
Restaurant Business
A M M Mustafa
211783261
Impact of Tourism and Foreign Direct Investment on Gross Domestic Production: Forecasts for the Case of Sri Lanka
Tourism industry is found as the second rapidly growing business after the information and communication technology in the global arena. A number of economies are triumphant in marketing their tourism destinations along with the generation of a considerable amount of foreign currency earnings due to the origination of tourism industrial sector. After economic reforms initiated in Sri Lanka in year 1977 onwards, the governments have thereafter implemented a number of various fruitful policies and development projects so as to promote the tourism industrial sector in pursuit of economic growth and development. This study investigates the Contribution of Tourism and Foreign Direct Investment (FDI) to Gross Domestic Production (GDP) in Sri Lanka. The software such as EViews 10, Excel, and Minitab are used to analyze the data. To achieve its goal, the nonparametric approaches such Nearest Neighbor Fit, Kernal Fit, and Confidence Ellipse to find the relationship were used in this study. Error Correction Mechanism, Co Integration, and Analysis of Causality are the econometric techniques used to find the relationship. This study employs annual data for the period from 1977 to 2017and forecasted the data from 2018 to 2022 in order to find out the future potential of the contribution. The co integration regression result revealed that the relationship between Tourism Receipts and Gross Domestic Production has been positively and statistically significant. The Foreign Direct Investment and Gross Domestic Production have been positively and statistically significant. However short run effect impact multiplier of Tourism Receipts is statistically not significant but Foreign Direct Investment statistically significant. The results of Granger Causality tests, in the variables are one way causal relationships. According to the results of this study suggests that it is vital for Sri Lankan government to implement some of the marketing efforts to develop the tourism industrial sectors as one of the best destinations in Asian region.
International Journal of Recent Technology and Engineering
A M M Mustafa
213818204
Contribution of Tourism and Foreign Direct Investment to Gross Domestic Product: Econometric Analysis in the Case of Sri Lanka
A M M Mustafa