Comparative Analysis: Between Developed Economies And Developing Economies (Dissertation Sample)
Trade Liberalization, Foreign Direct Investment and Infrastructure Spending: A comparative analysis of their common role in the economic development between selected developed economies and developing economies
Comparative analysis between Developed economies (G7 countries) and developing economies (BRICS countries)
G7 countries: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States
BRICS countries: Brazil, Russia, India, China and South Africa
1996 – 2015
1- Abstract (1 page)
2- Introduction (4 pages)
3- Literature review (5 pages)
4- Relation between Trade and Economic Growth (15 pages)
a. The Link Between Trade Openness and Long-Run Economic Growth
b. Trade Volumes or Trade Policies?
5- Relation between FDI and Economic Growth (15 pages)
a. Does FDI Cause Economic Growth?
b. Trends and Patterns of FDI Flow
6- Infrastructure and economic development (15 pages)
a. Trends in Infrastructure Investment
b. Infrastructure Investment Expenditures and Infrastructure Improvement
5- Institutions, Trade, and Foreign Direct Investment, Infrastructure Spending and Growth in the Time Series (3 pages)
6- Institutions, Trade, and Foreign Direct Investment, Infrastructure Spending and Growth in Cross Section (3 pages)
7- Empirical Evidence XXXXXXX I already done this part
8- Conclusions (2 pages)
TRADE LIBERALIZATION, FOREIGN DIRECT INVESTMENT AND INFRASTRACTURE SPENDING: A COMPARATIVE OF DEVELOPED (G7 COUNTRIES) AND DEVELOPING COUNTRIES (BRICS COUNTRIES) -1996-2015
By (Name of Student)
Date of Submission
The proposal examines the literature on how trade, foreign direct investments, and infrastructure development affect economic growth of selected developed and developing economies. A comparative analysis will be carried between developed economies (G7 countries) represented by Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States while the developing economies are represented by Brazil, Russia, India, China and South Africa. The comparative analysis will be carried between years 1996 to 2015. In addition, the proposal will establish the relationship between trade and economic growth in both developing and developed economies. Furthermore, the proposal will establish that trade variables in both developed and developing economies is captured in three indicators namely, the sum of exports and imports to the Gross Domestic Product (GDP), the ration of imports to the GDP and the sum of exports to GDP.
A quadratic expression is formed to capture the nonlinear threshold effect between economic growth and trade. Moreover, the relationship between Foreign Direct Investment (FDI) and economic growth will be analysed. The research will depict that trade and FDI are expressed as the ratio of GDP in both developed and developing economies. In addition, the co-relation between the FDIs and the GDP rate is inherent to the volume of investments brought into the host country. Moreover, the relationship between infrastructure and economic development in both developing and developed economies will be discussed by this proposal. The proposal will establish that infrastructure outputs such as power, transport, and water are used as production inputs in productive sectors such as manufacturing and agriculture, therefore forming a close relationship between GDP and infrastructure. The study will conclude by establishing the relationship of the three variables (trade liberation, FDI and infrastructure spending) in economic development in both developed (G7 economies) and developing economies (BRICS economies).
Developed and developing economies depend on trade, FDI, and infrastructure to spur their economic growth. The differences between the economic growth paths can be attributed to the volumes of investment in the three variables. The relationship between trade and development has dominated the debate in developmental economics and trade. Developed economies trade more thus high economic growth path. The study depicts that there exists a long relationship between trade and economic growth. In addition, the study depicts that trade and economic growth are co-related, but their relationship is fortified by the stability in macroeconomic policies. From, the analysis, negative macroeconomic variables such as inflation can constrain economic growth. Developed economies have embraced openness to trade which plays a crucial role in economic growth. In addition, the reduction and elimination of barriers to trade promote trade growth thus ultimately raise the GDP of the developed economies. Empirical evidence indicates that there is a trading threshold that exists between trade openness and economic growth. Developing countries must have more effective policies towards openness to trade in particular when controlling a level of imports thus boosting their economic growth through international trade.
Although there may be no considerable evidence link between the FDI and economic growth, FDI may be a recipe for economic growth in both the developed and developing economies. FDIs are expected to boost the host economic growth, it's evident that the extent of FDI growth depends on a country-specific characteristics. In particular, the FDI tends to promote economic growth of host countries with liberal trade regimes such as developed economies. Moreover, developed economies have open and liberal trade regimes, improved education thus human capital conditions encourage export-oriented FDI hence maintaining macroeconomic stability. Developing economies policymakers should focus on strategies and policies that promote economic growth thus attracting FDI inflows into their regions. Empirically, the FDI boosts the host economy via accumulation of capital by an introduction of new goods and the subsequent introduction of foreign technology thus enhancing the stock of knowledge in the host country through the transfer of skills. Developed countries benefit from the FDI by the increasing capital and technical spill overs. In addition to that FDI represents the potential source for sustainable growth and development given its ability to assist in human capital development and formation, generate spill overs in technology, and assist the host countries to integrate to global economy trade. Furthermore, the developed economies ensure the existence of competitive business environment thus enhancing the development of FDI enterprise.
FDI inherent to developed economies complemented the domestic savings by conferring foreign savings. The developed economies balance of payment receipts is augmented since the FDI fills the funding gap between the investment requirements and the local savings. According to the United Nations Conference on Trade and Development (UNCTAD), FDI has proven to be a stable source of funding since it is based on the long-term view of the growth potential of the recipient nation, access to wider markets and accessibility of raw materials. Therefore, as a result, individual countries have been seeking policies that attract FDI. Developing economies should seek FDIs to spur economic growth thus reducing macro-economic detrimental effects such as poverty.
Infrastructure forms the base in which Economic growth is realized. Infrastructure encompasses the roads, water, mass transport, airports, and utilities. Infrastructure aids support services to help grow productive sectors such as agriculture and industrialization. The pro-founding relationship between infrastructure and economic growth is quite complex. Although infrastructural development is necessary and important form economic growth and industrial take-off, the desire for a country growth is not directly proportional to higher or an increased need for infrastructure. In developed economies, infrastructure exhibit high network effects. As the number of users increases, the marginal productivity of infrastructural investments increase. In addition, the spread of network surpasses the average productivity inherent to investment until the market is all saturated.
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