Impact of Global Economic Trends on International Capital Flows: A Case of Selected Developing Countries

Abstract

The dynamic link between foreign capital flows in emerging nations and global economic trends is examined in this study. Trade and foreign direct investment (FDI), two important dependent variables, are the main focus of the research, which also looks at how they interact with other independent variables such broad money, CO2 emissions, GDP constant, gross fixed capital creation, and labor force. The study uses data taken from the World Development Indicators for the years 2000–2022 and uses unit root tests to evaluate the stationarity of the variables at the level and first difference. According to our research, wide money, CO2 emissions, GDP constant, gross fixed capital creation, and labor force have a favorable and substantial influence on trade and foreign direct investment (FDI) in developing nations. The results of the unit root tests reinforce the validity of our research by showing that the chosen variables are stable at the level. The study sheds light on the variables impacting the economic dynamics of emerging countries and offers insightful information on the complex relationships between global economic trends and international capital flows. The ramifications of these discoveries extend to stakeholders, investors, and policymakers who must comprehend and maneuver through the intricacies of capital flows within the dynamic framework of worldwide economic patterns.