IMPACT OF TRADE, FDI, ECOLOGICAL

FOOTPRINT, AND GLOBALIZATION ON

ECONOMIC GROWTH
YASMEEN BIBI
REG # FA22-REC-008
 TABLE OF CONTENTS
01 02 03
Problem
Introduction Objective
statement

04 05 06
Research Methodology Conclusion
Question
 Introduction
● International trade (IT) is vital for global
economic expansion by facilitating the
exchange of goods, services, and resources
across borders.
● All facets of an economy, including
industries, income levels, employment, and
living standards, are intricately connected
to international trade.
 Introduction
● FDI has experienced substantial growth,
increasing from US$ 49.8 billion in 1987 to
US$ 1.39 trillion in 2019.
● FDI is a key driver of global economic
growth, impacting capital inflows,
technology transfer, job creation, and more.
● Nations are enhancing policy frameworks,
eliminating trade barriers, and improving
institutional quality to attract more FDI.
 Introduction
● Globalization drives economic growth
through increased interconnectedness,
expanded market access, and
technological advancements.
● Factors contributing to globalization
include technological advancements,
trade liberalization, market access, and
the role of multinational corporations.
● Globalization increases a nation's direct
participation in the global market, leading
to market expansion.
 Introduction
● The Ecological Footprint, measuring how humans use natural
resources, has been going up steadily since 1961, showing that
our activities are increasingly affecting the environment.
● The Ecological Footprint influences economic growth by
impacting factors like resource availability, environmental rules,
market preferences, and global cooperation. It shows how our
actions in the economy are intertwined with the health of our
planet.
● Originally for countries and people, the Ecological Footprint now
helps with companies and products. It's like a guide telling us
how close we are to using too much and helps us choose things
that are better for the planet.
 Problem Statement
● Asian economies need to understand how international trade, foreign investment, economic growth,
globalization, and ecological impact work together.
● These factors create complex challenges, and we need to understand how they interact with each other.
Globalization offers growth chances but also brings issues like inequality, unemployment, and environmental
problems, especially for developing nations.
● Leaders and big companies face a tricky task: balancing the good and bad of global trade to make sure Asian
economies grow sustainably and include everyone.
 Objective of the study

1. 3.
To analyze and understand To investigate the role of
how Trade, FDI, EF, and China’s FDI in economic
Globalization affect the growth and Trade growth
economic growth of 2. of South Asian region
Asian Economies. To examine the function of
bilateral globalization
differences in the
economic growth of South
Asian economies
 Research Question

What is the impact of Trade, What is the role of China’s

FDI, and Globalization FDI in economic growth
on economic growth in and trade in the South
Asian Economies? Asia Region?
How the globalization
differences helping /or not
helping in the economic
growth of South Asian
Economies
 Significance of the study

• Valuable insights for policymakers, economists, and businesses.

• Assists in formulating well-informed decisions and strategies.
• Analyzes the impact of trade, foreign FDI, ecological footprint (EF), and international trade (IT) on
economic growth.
• Aims to develop strategies that balance economic prosperity with environmental considerations.
• Relevant worldwide for policymakers, researchers, and stakeholders.
• Contributes to academic discussions in economics, environmental studies, and international relations.
• Enhances understanding of global economic relationships.
 Literature Review
Study Countries Period Methodologies Conclusion:
Devika Dutta and 56 developing and 1985 and 2018 cross-country Negative and
Kevin P. Gallagher, developed countries regression analysis significant
2022
Kazeem Abimbola Southern African 1970 to 2022 panel regression and Trade openness
Sanusi, Joel Hinaunye Development Dumitrescu-Hurlin (positive and
Eita, 2023 Community (SADC) (DH) panel causality significant),
FDI(negative and
insignificant),
(infrastructure
improvement and
policies (positive and
significant)
Di Wang & Sajal 45 countries 2001–2012 Gravity analysis and Bilateral tariff in FDI
Lahiri, 2023 the PPML estimation inward (positive and
significant),
bilateral tariff in FDI
outward (negative and
significant)

Su Pan & Zhaohui B&R countries 2009 - 2015 Exponential Random Positive and
Chong, 2023 Graph Model (ERGM) significant

Sobirov, et al, 2023 10 countries 2000 - 2020 panel Autoregressive Positive and
Distributed Lag model significant
 Research gap
• Despite various studies on trade, FDI, and growth, there's a gap in understanding how these factors collectively impact the
growth of Asian economies.
• The lack of clarity hampers policymakers, economists, and businesses from devising precise strategies for sustainable
economic development in the region.

• Bridging this knowledge gap is essential for making well-informed decisions tailored to the specific dynamics and
challenges of Asian economies.

• EF, linked to Sustainable Development Goal (SDG) 12, plays a vital role in understanding the impact of economic growth
on sustainability in the Asian region.
 Methodology

The required data for this study will be collected from the WDI, UNCTAD and WITS data
sources for the time of 1992-2022.
Conceptual framework
 Methodology
 The study will use GMM estimation as it is the best technique to deal with the endogeneity issue,
two-step GMM models can solve the endogeneity problem and provide consistent estimates even
with measurement error. Secondly, the model provides asymptotically efficient inferences, that is,
minimal statistical assumption, and thirdly due to the dynamic phenomena of economic growth the
dynamic model of GMM is better to study the economic progress of Asian Economies.
 Further, The study will assess panel least squares regression, a precisely fixed effect model as
supported by the previous studies to investigate the quantitative impact of Chinese FDI on economic
growth in South Asia.
 Estimation Model

Y= f (L, K,FDI, EFP, GL, IMP, EXP)

Y= β0+ β1 Kit + β2Lit + β3 FDIit + β4 GLit + β5 Techit+ β4 expit + β5 impit +β6Xit + D. Covid-19 + μit

Where Y denotes to economic growth in Asian Economies in t times for i country. Further K and L refer to
capital and labor, FDI is foreign direct investments, GL is globalisation, Tech shows technology, exp and
imp refers to exports and imports in Asian Economies at time t. X refers to control variables while D
covid is a dummy to represent the COVID-19 effect .
 . Methods

The study will use GMM estimation as it is the best technique to deal with the endogeneity issue,
two-step GMM models can solve the endogeneity problem and provide consistent estimates even
with measurement error. Secondly, the model provides asymptotically efficient inferences, that is,
minimal statistical assumption, and thirdly due to the dynamic phenomena of economic growth the
dynamic model of GMM is better to study the economic progress of Asian Economies.
Further, The study will assess panel least squares regression, a precisely fixed effect model as
supported by the previous studies to investigate the quantitative impact of Chinese FDI on
economic growth in South Asia.
 Conclusion
The analysis of how Trade, Foreign Direct Investment, ecological footprint, and
Globalization impact the economic development of Asian Economies can contribute to
the formulation of more effective and precise economic policies, promoting
sustainable development and prosperity in the region.
Thanks!
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