Page 16 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.81, # 1, 2024, pp. 4-21

Table 10: Long-Term Estimation Results

Variable Coefficient Std. Error t-Statistic Prob.
FDI 119.0373 21.30500 5.587294 0.0000
C 1.79E+10 2.09E+10 0.857964 0.4016
EC = GDP - (119.0373*FDI + 17937338261.5320)

Source: Compiled by the researcher depending on: outputs of EViews 12.

From Table (10), there's a statistically significant positive effect of FDI (FDI) on
economic development (GDP); a one-unit increase in FDI leads to an increase in GDP
by 119.03 units, aligning with most empirical study results and the economic theory
that suggests FDI increases the potential for rapid development in developing
countries due to its ability to finance from both domestic and foreign sources,
exceeding the capacity of local competitors, enabling foreign projects to finance new
investments, thereby enhancing development potential in these countries .

Short-Term Parameters
The following table presents the short-term estimation results:
ECM Regression
Table (11): Short-Term Estimation Results
Case 2: Restricted Constant and No Trend
Variable Coefficient Std. Error t-Statistic Prob.

D(GDP(-1)) -0.247528 0.179818 -1.376551 0.1847
D(GDP(-2)) -0.631897 0.179157 -3.527050 0.0023
D(GDP(-3)) -0.285785 0.186139 -1.535336 0.1412
D(FDI) 15.56184 4.483988 3.470537 0.0026
D(FDI(-1)) -11.32589 5.583227 -2.028556 0.0568
COS(2*@PI*3.9099999... 1.32E+10 4.76E+09 0.000000 0.0000
SIN(2*@PI*3.90999999... -6.34E+09 3.92E+09 0.000000 0.0000
CointEq(-1)* -0.283788 0.060923 -4.658168 0.0002
R-squared 0.581468 Mean dependent var 4.90E+09
Source: Compiled by the researcher depending on: outputs of EViews 12.
0.441957 S.D. dependent var
Adjusted R-squared 1.38E+10 Akaike info criterion 1.85E+10
49.76415
S.E. of regression
From the table above, the error correction coefficient value is -0.28, less than one and
4.01E+21 Schwarz criterion
50.14134
Sum squared resid
negative with statistical significance at a 5% level, indicating the presence of a long-
49.88228
-713.5802 Hannan-Quinn criter.
Log likelihood
2.208839
Durbin-Watson stat
term equilibrium link as 28% of imbalances are corrected each year, meaning all
imbalances are corrected within three years and six months.
It's also noted that FDI has a positive effect in the short term on GDP in Algeria,
aligning with studies like (Huong, Duong, & Thuy, 2018).

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