Ieraioal Joural of Academic Research i Accouig, Fiace ad Maageme Scieces Vol. 6, No.2, April 2016, pp. 14 20 E-ISSN: 2225-8329, P-ISSN: 2308-0337 2016 HRMARS www.hrmars.com Regressio Model Used i Aalyzig he Effec of Foreig Direc Ivesme o Ecoomic Growh Zoica DINCA (NICOLA) PhD. Sude, Arifex Uiversiy of Buchares/The Buchares Uiversiy of Ecoomic Sudies, Buchares, Romaia, E-mail: zoicaicola@yahoo.com Absrac Key words FDI defiiely ifluece ecoomic growh. While aalyzig he lik bewee FDI ad ecoomic growh, we bear i mid ha ivesmes ifluece ecoomic growh. Empirical sudies reveal ha FDI effec upo ecoomic growh is posiive. Sudies show ha here is a lik bewee he wo variables, alhough, due o he ifluece of oher facorial variables, ecoomic growh ca be sigifica a imes. I his paper, I have aalyzed he lik bewee he variable Foreig Direc Ivesme, cosidered o be facorial, ad ecoomic growh, he resulaive variable. The quaiaive sudy has bee doe wih ecoomeric models ha ca be used also o predic ecoomic reds. Tha is why I have used he simple ad muliple liear regressio models. Variable, FDI (foreig direc ivesme), GDP (gross domesic produc), simple ad muliple liear regressio model, parameer DOI: 10.6007/IJARAFMS/v6-i2/2035 URL: hp://dx.doi.org/10.6007/ijarafms/v6-i2/2035 1. Iroducio The foreig direc ivesme is a major source of foreig fuds for all couries, irrespecive of is developme level. The iese periods of ecoomic growh are characerized by he process of aracig some impora FDI flows (Lipsey, 2000). Sudies reveal he ifluece of foreig direc ivesme upo ecoomies, ad his simulaes ecoomic growh. The effec of foreig direc ivesme also depeds o he ecoomic poeial of he coury, regulaios o he foreig direc ivesme, he way i which hese ivesmes build up, as ew ivesme or foreig capial icrease. Table 1. The causaliy lik bewee ecoomic growh ad foreig direc ivesme Auhors Purpose of he research Resuls ad coclusios Bloomsrom, Lipsey ad Zaja, 1994 Posiive bu depeds o reveue per capia i he hos coury Posiive if he coury has a expor-orieed Balasubramayam, Salisu ad sraegy ad egaive if he coury has a Sapsford, 1996 subsiuio impor-orieed sraegy De Mello, 1997 Posiive, for couries wih high reveue Boreszei, Gregorio ad Lee, 1998 FDI effecs upo Posiive, bu depeds o educaio level Bosworh ad Collis, 1999 ecoomic growh Posiive Carkovic ad Levie, 2002 Posiive, if ecoomies have developed fiacial markes Begoa ad Sachez Robles, 2003 Posiive, bu depeds o ecoomic codiios i he hos coury Alfaro, 2003 Effec depeds o ivesmes : Posiive for producio, Negaive for primary secor, ad Nococlusive for Services secor Hase ad Rad, 2004 Posiive Kholdy ad Sohrabia, 2005 No effec Source: Moraru C. (2013), Ivesițiile srăie direce şi creşerea ecoomică î Româia, Ecoomie eoreică şi aplicaă Volume XX, No. 5(582), p. 126
Ieraioal Joural of Academic Research i Accouig, Fiace ad Maageme Scieces Table 1 shows a brief preseaio of he sudies o he causaliy lik bewee ecoomic growh ad foreig direc ivesme (Moraru, 2013). Ecoomeric models help udersadig he ecoomic relaios ad akig decisios o ecoomic evoluio. Ecoomerics uses elemes of ecoomic mahemaics ad saisics, emphasizig wo opposie reds i approachig ecoomy: heory oly ad facs oly (Albu, 2003). The firs ecoomic approach focuses oly o he effecs of he deducios made i hypoheical sysems abou cerai ecoomic pheomea, he secod focuses o he improveme ad developme of he ecoomic daa collecio ad recordig sysem. Acually, here is a ier-codiioig relaio bewee he wo, sice he cofirmaio of heoreical hypoheses resuls oly by usig a series of daa, ad he ierpreaio of he pracical sudies resuls requires a heoreical basis. 2. Mehodology of research To aalyze he impac of he foreig direc ivesme upo ecoomic growh i Romaia, I have used a se of complex macroecoomic models. I my research, I have aalyzed he pheomeo wih ecoomeric models ha ca be used o predic he evoluio of a ecoomic sysem, he simple ad muliple liear regressio model (Aghelache ad Aghel, 2014). Wih hese models we ca esablish values of parameers of he macroecoomic models, depedig o values of oher macroecoomic idicaors cosidered o be idepede variables (explicaive) or depedig o he evoluio of he facor ime. I his ecoomic aalysis, we mus fid he relaio bewee wo or several variables, by usig wo saisical echiques: correlaio shows how srog is he lik bewee he aalyzed variables; regressio explais ad allows o predic he value of oe facor i relaio o he oher(s). Simple regressio aim is o highligh he relaioship bewee a depede variable explaied (edogeous, score) ad a idepede variable (explaaory, exogeous facor predicors) (Adrei ad Bourboais, 2008). The simple regressio model (uifacorial regressio model) is defied hrough a mahemaical relaio buil up i he coex of ecoomic heory, which implies ha he ecoomic pheomeo as effec is he resul of he cumulaed acio of wo caegories of facors: oe mai facor ha is esseial; all he oher facors ca be cosidered o-esseial, wih radomly occurred acio or cosa acio, ivariable upo he ecoomic pheomeo as effec. These iflueces are colleced i he resulaive variable. The simple regressio model ca be rascribed mahemaically as follows: Y = f(x) + ε (1) I a simple regressio ecoomeric model, he relaio bewee he resulaive variable (Y) ad he causal variable (X) ca be described by a fucio as follows: y i = b + a. X i i+ ε i (2) Where: y i resulaive characerisic (explaied); x i facorial characerisic (explaaory); ε i residual variable. The hypoheses uderlyig he regressio model ha helps aalyzig he effec of FDI upo ecoomic growh are he followig: I 1: he daa series are o affeced by measureme errors; I 2: he residual variable has zero mea; 15
Ieraioal Joural of Academic Research i Accouig, Fiace ad Maageme Scieces I 3: he dispersio of he residual variable is ivariable i ime, amely i has he propery of homoscedasiciy; I 4: he residues are o self-correlaed; I 5: he facorial (explicaive) variable is o correlaed wih he residual variable; I 6: he errors of he model are usually disribued accordig o a disribuio of zero mea ad σ 2 dispersio. To esimae he parameers of a liear regressio model we ca use he mehod of he leas squares, or he maximum Likehood mehod. Accordig o he leas squares mehod, he esimaio of he parameers is based o he codiio ha he sum of he squares of he differeces bewee he real value ad he value esimaed hrough he regressio model should be miimal: F(αˆ,βˆ) mi â x x bˆ y â 1 (y x x y 2 2 ŷ ) mi (y bˆ â x ) 1 y x 2 x This sage requires exremely complicaed calculaios, ad a very log ime. To make he exper s work easier, specialized IT applicaios have bee creaed, ha allow esimaig he parameers of he model ad he validaio of he resuls obaied. Oe of he IT programs used o solve ecoomeric aspecs is Eviews, which I have used i his research. 3. Resuls To reflec he correlaio bewee he evoluio of he FDI ad he GDP he mai macroecoomic resul idicaor, I have used a se of daa for 2004 2014 (able 2). Table 2. GDP evoluio ad FDI evoluio bewee 2004-2014 Year PIB ISD 2004 61404,0 15040,0 2005 80225,6 21885,0 2006 98418,6 34512,0 2007 125403,4 42770,0 2008 142396,3 48798,0 2009 120409,2 48827,0 2010 126746,4 51414,0 2011 133305,9 53723,0 2012 133511,4 57851,0 2013 144253,5 59958,0 2014 150230,1 60198,0 The ifluece of he FDI upo he GDP ca be revealed wih he simple liear regressio model, i which he GDP is he resulaive variable, ad he FDI is he explicaive variable. Here is such a model: GDP = a + b FDI (4) I a firs sage, wih Eviews (Adrei e al., 2008), I aalyzed he evoluio of he wo idicaors durig ha period of ime, i erms of diagrams ad descripive saisics (figure 1). 16 (3)
Ieraioal Joural of Academic Research i Accouig, Fiace ad Maageme Scieces As see i he diagrams, he evoluio of he wo idicaors is similar. Boh he GDP ad he balace of he FDI have a sigifica icrease i 2008, ad remai a a relaively cosa level. The graphical represeaio of he correlaio bewee he wo idicaors, doe wih Eviews, reveals ha here is a srog liear lik, wih a ascedig slope, bewee he GDP ad he FDI. Based o hese aspecs, we ca coclude ha here is a srog coecio bewee he balace of he FDI ad he GDP. FDI is cosidered herefore o be a major mehod o icrease he GDP. Figure 1. Evoluio of idicaors 17 Figure 2. ISD vs. PIB
Ieraioal Joural of Academic Research i Accouig, Fiace ad Maageme Scieces The wo series have bee processed wih Eviews, ad he parameers have bee esimaed wih he leas squares mehod. The resuls are show below (figure 3). Figure 3. Leas squares mehod Based o he parameers obaied (a ad b), he regressio model becomes: GDP = 39299.27+ 1.78 FDI As see, he ifluece of he FDI o he GDP is sigifica, ad his is explaied by he realiies i our coury for each leu araced as FDI, GDP ca icrease wih 1.78 lei. To oe however ha a high value of he free erm idicaes he exisece of oher sigifica facors of ifluece coribuig o he ascedig evoluio of he GDP i Romaia. The probabiliy of his ecoomeric model is very high. The values of he ess R 2 (0.93) ad R 2 adjused (0.92) are close o 1, while he value of es Prob (F-saisical) is 0.000002, much below he sigifica hreshold of 5%. Based o hese elemes, we ca say ha he simple liear regressio model is accurae ad ca be successfully used i ecoomic aalyses. I furher o developed he aalysis, by usig a muliple regressio model ha uses as explicaive variables, he wo compoes of he FDI, capial paricipaio ad iragroup loas, bewee 2004 2014. Figure 4. Compoes of he FDI, capial paricipaio ad iragroup loas, bewee 2004 2014 18
Ieraioal Joural of Academic Research i Accouig, Fiace ad Maageme Scieces The daa have bee aalyzed wih he same IT applicaio, by usig he leas squares mehod i order o esimae he parameers of he muliple regressio model. Here are he resuls: Figure 5. Leas Squares mehod The muliple regressio model resuled ca be wrie as such: GDP = 29,711.41+2.77 PC + 0.04 CIG As see, he ifluece of capial paricipaio o he GDP is very impora; each moeary ui icrease geeraes a icrease of 2.77 moeary uis i he GDP. The ifluece of he iragroup loas is also posiive bu much weaker (oly 0.04 moeary uis icrease i he GDP for each 1 leu ivesed). The validiy of his model is highly accurae, he value of he es R 2 is 0.94, ad es R 2 adjused i 0.92. 4. Coclusios The aalyses performed wih regressio models lead o he coclusios ha FDI may geerae ecoomic growh. Romaia mus coiue he cosolidaio of is ecoomy by implemeig ivesmes sraegies ha provide cofidece i he Romaia busiess evirome ad i he aioal developme pla. This requires improveme of he Romaia legislaive ad fiscal frameworks. The implemeig, i he ear fuure, of a cohere sraegy o arac foreig ivesors ad o simulae heir aciviy i Romaia is a measure ha may lead o a healhy ecoomic growh for he Romaia ecoomy. Refereces 1. Albu L.-L. (2003). Modelarea şi evaluarea impacului ivesiţiilor direce, aţioale şi ieraioale asupra pieei mucii şi evoluiei macroecoomice di Româia, Isiue for Ecoomic Progosis of he Romaia Academy (Isiuul de Progoză Ecoomică al Academiei Româe), Buchares; 2. Albu L.-L. (2006). Srucura modelului şi sadiul realizării acesuia, Ieraioal Coferece: Macromodelul rimesrial al ecoomiei româeşi, Naioal Commissio for Ecoomic Forecasig, Romaia Ceer for Ecoomic Policies, Sepember, Buchares; 3. Adrei, T., Bourboais, R. (2008). Ecoomerie Ecoomic Publishig House, Buchares; 4. Adrei, T., Sacu, S., Iacob, A.I., Tuşa, E. (2008). Iroducere î ecoomerie uilizâd Eviews, Ecoomic Publishig House, Buchares; 5. Aghelache, C. (2015). Româia 2015. Sarea ecoomică î coiuă creşere, Ecoomic Publishig House, Buchares; 19
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