جستجوی مقالات مرتبط با کلیدواژه « Financial Development » در نشریات گروه « اقتصاد »

Financial development is one of the effective factors on economic growth in different countries. The relationship between financial development and economic growth is influenced by various parameters and the economic structure of countries. One of the factors that can affect this relationship is the natural resource abundance and the degree of dependence on them. According to economic literature, natural resource abundance can impact financial efficiency, capital accumulation, and the optimal allocation and effectiveness of financial resources, thereby influencing the relationship between financial development and economic growth in resource-rich countries. This study aims to explore the impact of natural resource abundance on the relationship between economic growth and financial development through productivity in Iran.

In order to investigate and empirically analyze the long-term and short-term dynamic relationship between variables, this research employs the Autoregressive Distributed Lag (ARDL) bounding test approach. The ARDL Bounding test method was developed by Pesaran and Shin (1999) and Pesaran et al. (2001). This method offers advantages over other conventional and previous cointegration methods, such as Johansen and Toda-Yamamoto approaches. Some advantages include applicability regardless of considering the order of cointegration between variables, its ability to handle cases where variables are I(0) or I(1), suitability for limited sample sizes, obtaining efficient estimates without risk of over-specification in long-run model relationships, and presenting a reduced form single-equation form rather than a systemic one for the long-run relationship.

Based on the results obtained from the research, financial development has not shown a significant impact on economic growth in Iran during the study period. This suggests that institutions and financial entities, particularly the banking system, have not effectively channeled financial resources towards productive investments and market stimulation. However, the abundance index of natural resources has demonstrated a positive and significant influence on economic growth.Considering the substantial portion of Iran's GDP that is attributed to oil revenues, such a finding is not unexpected. The per capita capital impact on economic growth is also positive and statistically significant. Among the effective factors on economic growth in this study, this variable has exerted the most considerable impact, indicating that capital plays a crucial role in boosting economic growth in Iran. Estimating the factors affecting total factor productivity (which is calculated using the Solow method) also indicates that financial development has had a positive impact on total factor productivity during the study period. However, the ultimate impact of financial development on productivity is influenced by oil revenues, as per the estimated model. The negative and significant coefficient of the interaction variable between financial development and  natural resource abundance suggests a negative effect of oil revenues on the relationship between financial development and productivity in Iran. This result could imply an indirect impact of resource abundance on the financial development-economic growth relationship through the productivity channel during the study period in Iran.Furthermore, it signifies that the heavy dependence on oil, one of the most vital avenues for economic growth, has eroded the relationship with financial development. Hence, the research hypothesis, suggesting that the abundance of natural resources (oil dependence) weakens the relationship between financial development and economic growth in Iran due to its negative impact on productivity, is validated, and the "resource curse" hypothesis is confirmed for the study period in Iran.

The results of this study indicate that financial development had a positive and significant impact on total factor productivity in Iran. However, ultimately, it did not have a significant impact on economic growth. This is due to the abundance of natural resources (oil revenues) leading to a reduction in the positive influence of financial development on total factor productivity. As a consequence, it weakens the relationship between financial development and economic growth during the examined period in Iran. Based on these findings, it is plausible to confirm the hypothesis of the "resource curse" during the examined period in Iran.The findings can encompass a set of policy recommendations for the Iranian economy. Firstly, the government should be aware of the indirect negative impact of oil dependence on the financial system and, consequently, on investment activities. It is logical for the government to maintain the degree of oil dependence at the lowest possible level, enhance economic diversification, and increase the contribution of other sectors to GDP growth. Additionally, the financial system should engage more in productive investment activities to strengthen its role in improving economic growth. In this regard, policymakers should pursue measures that facilitate improvement of banking intermediation efficiency.Furthermore, one of the most significant mechanisms of the resource curse in oil-dependent economies is the mismanagement of these resources and neglect of human development. Easy access to oil revenues might exempt the government from investing in human capital development, which could potentially have a negative impact on the performance of the financial sector and other sectors of the economy. Therefore, it is recommended that policymakers prioritize the necessary prerequisites for enhancing human development, which plays a crucial role in enhancing productivity and investment efficiency.

Energy plays a crucial role in the progress of societies, as a necessary component towards achieving economic development and prosperity. Energy sources can be categorized into renewable and non-renewable ones. As the world encounters crises of environmental pollution, and climate change leading to long-term negative effects on ecosystems and global economy, there is an increasing focus on renewable and clean energy sources. In response to these challenges, many countries are working to enhance the proportion of renewable energy in their environmental cycles. In this regard, Iran has been identified as one of the economies confronting high pollution in the region; therefore, it is essential to investigate the factors influencing the consumption of clean energy in this country. This research aims to study the independent effects and the interactive roles of environmental innovation, financial development, and financial risks on the consumption of renewable energy in Iran. The findings of the research can provide valuable insights for policymakers and planners, assisting them in formulating and implementing effective financial, energy, and environmental policies as the main purpose of these policies is to enhance sustainable economic growth and stability while addressing environmental challenges.

In order to conduct the research based on the objectives of the study, our experimental model is specified and tested in the form of following four equations.In equations 1 to 4, the dependent variable is REC (Renewable Energy Consumption), representing the percentage of total final energy consumption attributed to renewable sources. The main independent variables are:EI (Environmental Innovation), measured by the number of the patents recorded in the environment fieldFD (Financial Development), reflecting the level of financial developmentFR (Financial Risk), indicating the degree of financial riskThe above independent variables also include their interaction variables.Additionally, the control variables are:EG (Economic Growth), represented by the GDP per capita in 2015 constant price in US dollarsEP (Environmental Pollution), measured by the total greenhouse gas emissions in kilotons of CO2 equivalentTO (Trade Openness), representing trade as a percentage of GDPThe data for REC, EG, TO, and EP are sourced from the World Bank. The variable EI is obtained from the database of the Organization for Economic Cooperation and Development (OECD). FR is sourced from Political Risk Services (PRS). The variable FD is extracted from the International Monetary Fund (IMF). Empirical research models were analyzed using time series data to cover the years 1990 to 2022. The Dynamic Ordinary Least Square (DOLS) method was employed for the analysis, allowing for a comprehensive testing of the relationships among the variables over the specified time period.

The stationary of variables, assessed by the Augmented Dickey-Fuller test (ADF), indicates that REC, TO, EG, FD, and FR variables are stationary in order one I(1), while EP and EI variables are stationary I(0). This suggests that cointegration relationship of the data is of orders I(0) and I(1). The optimal lag was determined using the Bayesian Information Criterion (SBC); it is lag one. The Johansen-Juselius Cointegration Test was employed to examine the existence of long-term relationships among the research variables. The results confirm at least one long-term relationship among the research variables in various model specifications. In the first model, the FD variable is positive and statistically significant (P = .01). A one-unit increase in FD corresponds to a 2.92 unit increase in the REC variable. In the second model, the FR index is positive and statistically significant (P = 0.1). A one-unit decrease in FR leads to a 0.5-unit increase in the REC variable. For model 3, the interactive variable of EI and FD is statistically significant (P = .01). A one unit increase in this interactive variable results in a 0.82-unit increase in REC. In model 4, the interactive variable of EI and FR is significant (P = .01) with a positive sign, indicating that a one-unit increase in this interactive variable leads to a 0.07-unit increase in REC. The results also show that the parameter of EG is significant at the 5% probability level. A one percent increase in EG corresponds to REC increases of 1.62, 2.24, 3.42, and 2.38 units for models 1, 2, 3 and 4, respectively. The EP variable has a negative effect on REC (P = .01). A one percent increase in EP results in REC increases of 2.44, 3.58, 3.16, and 3.08 units for models 1, 2, 3 and 4, respectively. The TO variable, with a positive sign, is significant at the 1% probability level. A one-unit increase in TO corresponds to REC increases of 0.03, 0.03, 0.02 and 0.02 units for models 1, 2, 3 and 4, respectively. The DOLS method was employed to estimate the research models.Conclusions and Policy Implications: The results indicate that the EI (Environmental Innovation) variable has a positive impact on REC (Renewable Energy Consumption). The application and development of technology plays a crucial role, empowering investors to enhance energy efficiency and environmental quality through the implementation of new innovations in production and the expansion of clean energy development infrastructure. Furthermore, the findings demonstrate that FD (Financial Development) has a positive effect, while financial risk (FR) has a negative effect on REC. In addition, the simultaneous combined impact of FD, FR, and EI on REC is significant and positive effects. The results suggest that, in countries like Iran, where the share of renewable energy consumption is smaller, improvements in financial indicators and encouragement of environmental innovations have a more noticeable effect on strengthening the development of the renewable energy industry. The study also highlights that FD amplifies the effect, while FR lessens the effect of EI on the REC variable. This implies that, in countries with a smaller share of renewable energy consumption, the influence of enhancing financial development combined with environmental innovations on the development of the renewable energy sector is more considerable. The results suggest that technological innovation is a potential solution to boost the consumption and development of renewable energy, particularly in the field of improved financial development. A developed financial system, as indicated by the study, provides various financing methods and risk management tools for companies and households, facilitating access to funds with reduced financial risks. Moreover, innovative technology can enhance the production and distribution of renewable energies and raise the standard level of manufacturing industries. In conclusion, creating conditions to improve the productivity of innovative technologies in production with minimal pollution and expansion the combination of renewable energy and technological innovation are the approaches suggested in this study. This dual strategy can mitigate environmental damage while promoting sustainable energy consumption and development.

The current research has investigated the effect of financial development and renewable energy consumption on carbon emissions based on consumption in Iran by controlling the variables of economic growth and electricity consumption in the period from 1990 to 2021. After examining the Manai test of the research variables using modified Dickey-Fuller and Ziot-Andrews tests, Bayer and Hank's cointegration test was performed to check the existence of collinearity between the research variables. Then, autoregressive distributed lag estimators, fully modified ordinary least squares, dynamic ordinary least squares and gradual shift causality test were used to investigate the long-term relationship of variables and their causal relationship. The results clearly show that financial development and renewable energy consumption reduce carbon emissions based on consumption in Iran, and economic development and financial development increase carbon emissions based on consumption. The results of the test of gradual causal changes have confirmed the main results of the estimation methods used. Therefore, policymakers in Iran should encourage research and development in low-carbon technologies and also target investments in renewable energy and reduce the level of non-renewable energy imports and avoid investing in high energy consumption sectors that lead to an increase Avoid carbon emissions based on consumption.

 With the process of economic development, environmental destruction and financial development of MENA member countries have increased. Therefore, in order to protect the environment, it is necessary to identify the factors affecting environmental degradation, especially the impact of financial development and its adjustment mechanisms. In addition, the impact of financial development on the ecological footprint was also investigated through the channel of human capital and institutional quality. This descriptive-analytical study was conducted at the international level for MENA member countries. The data was panel data for the years 2000-2020, which was extracted from the World Bank database. Im, Sons, Shin and Levin, Lin and Chu tests were used to check reliability, Pedroni and kao tests to check co-collinearity, and fully modified ordinary least squares (FMOLS) methods were used to estimate models in Eviews 10 software. The Financial development and GDP increased and human capital and institutional quality decreased environmental degradation. Also, financial development reduced the destruction of the environment through the channel of human capital and institutional quality, so it is suggested that governments, while expanding the capacity of good governance, move the laws governing the financial development of countries in favor of nature-friendly industries and human capital as an important factor in quality Increase the environment.

Entrepreneurship is a crucial engine for economic growth, job creation, and innovation. However, limited access to financial resources remains a significant barrier for aspiring entrepreneurs. This study builds on the established link between financial development and entrepreneurship by exploring the crucial role of institutional quality in this relationship. We posit that a robust and well-functioning financial system alone may not be sufficient to foster entrepreneurship in the absence of strong institutions. Extensive research has documented the positive impact of financial development on entrepreneurship. Increased access to financial resources through developed financial institutions and markets empowers individuals to pursue entrepreneurial ventures (Dutta & Meierrieks, 2021; Ajide & Ojeyinka, 2022). However, the effectiveness of financial development can be contingent on the prevailing institutional environment (Beck et al., 2002). Strong institutions, characterized by good governance, rule of law, and property rights enforcement, create a conducive environment for entrepreneurial activity by reducing uncertainty and mitigating risks. 

This study employs a two-pronged approach to analyze the relationship between financial development, institutional quality, and entrepreneurship in MENA countries. First, a system GMM model is estimated to examine the direct effects of financial development (FD) and institutional quality (GQ) on entrepreneurship (EN), measured by the Early-stage Entrepreneurial Activity (TEA) rate. (1)  Where i and t represent country and year, respectively. Xit is a vector of control variables including GDP per capita, GDP growth rate, government size, trade openness, business startup costs, foreign direct investment, and tax burden.Second, a panel threshold model is employed to investigate the conditional effect of institutional quality on the relationship between financial development and entrepreneurship. This model allows us to identify whether the impact of financial development on entrepreneurship differs depending on the level of institutional quality (good vs. poor). (2)Here, δ is an indicator function that takes a value of 1 when institutional quality is good and 0 otherwise.The institutional quality data is constructed from six sub-indicators extracted from the World Governance Indicators (WGI) dataset: control of corruption, rule of law, quality of regulations, government effectiveness, voice and accountability, and political stability. 

The empirical results confirm the hypothesized relationships. Financial development, measured by various indicators, has a positive and statistically significant impact on entrepreneurship in MENA countries. This finding aligns with existing literature (Dutta & Meierrieks, 2021; Ajide & Ojeyinka, 2022). Importantly, the study reveals a critical role for institutional quality. The positive effect of financial development on entrepreneurship is amplified in countries with strong institutions, particularly those characterized by good governance. Conversely, the impact of financial development is weaker, and statistically insignificant, in countries with weak institutional environments. These findings highlight the conditional nature of the relationship between financial development and entrepreneurship.Discussion and Policy ImplicationsThis study offers valuable insights for policymakers in developing economies, particularly those in the MENA region. The results underscore the importance of a two-pronged approach for fostering a thriving entrepreneurial ecosystem. First, promoting financial development through initiatives that enhance access to finance, deepen financial markets, and improve the efficiency of the financial sector is crucial. This could involve supporting the development of a diverse range of financial institutions, including venture capital firms, microfinance institutions, and angel investor networks.Second, the study emphasizes the critical role of institutional reforms in maximizing the positive impact of financial development on entrepreneurship. Policymakers should prioritize measures to strengthen governance, combat corruption, uphold the rule of law, and streamline regulations. Additionally, fostering political stability and promoting democratic practices can create a more predictable and secure environment for entrepreneurs.Limitations and Future ResearchThis study offers valuable insights, but it also has limitations that pave the way for future research.Limited Sample: The analysis focuses on 11 MENA countries. Expanding the sample to include a broader range of developing economies could provide a more generalizable understanding of the interplay between financial development, institutional quality, and entrepreneurship.Data Availability: The study relies on existing datasets to measure financial development and institutional quality. Future research could explore alternative or more nuanced measures to capture the complexities of these concepts.Endogeneity: A potential issue of endogeneity exists between financial development and entrepreneurship. Future research could employ advanced econometric techniques to address this potential bias.Future research directions could explore the following:The Role of Specific Financial Instruments: Investigate how different types of financial instruments, such as venture capital, microloans, or angel investments, influence entrepreneurial activity under varying institutional contexts.The Impact of Technological Advancements: Examine how the emergence of Fintech (financial technology) solutions can potentially improve access to finance and foster entrepreneurship in MENA countries, particularly in light of institutional constraints.The Entrepreneurship Ecosystem: Explore the broader entrepreneurial ecosystem beyond financial development and institutional quality. This could include investigating the role of social capital, cultural attitudes towards entrepreneurship, and educational systems in fostering entrepreneurial activity. 

In conclusion, this study sheds light on the crucial interplay between financial development, institutional quality, and entrepreneurship in the MENA region. The findings underscore the necessity of a comprehensive approach that simultaneously promotes financial development and strengthens institutional frameworks. By implementing these recommendations, policymakers can create an environment that fosters a vibrant entrepreneurial ecosystem, leading to sustainable economic development and prosperity.

Income inequality remains a concern. Previous studies show that with the growth of a country's economy, incomes increase and income disparity decrease. However, there is evidence that income inequality worsens as countries develop. This study examines the relationship between International Financial Reporting Standards (IFRS) and income inequality with regard to the moderating role of financial development for a selection of Asian developing countries in the period 2000-2022 and using Ordinary Least Squares and Generalized Least Squares methods. The results show that financial development affects the relationship between IFRS and income inequality. Furthermore, there is a direct relationship between IFRS and income inequality. One of the reasons for the direct impact of IFRS on income inequality can be that the increased transparency of financial reporting as a result of the use of IFRS enables employees and regulatory organizations to negotiate with employers about employment-related issues such as job security, wages, and pensions. If these negotiations lead to benefits for employees, income inequality will decrease. The indirect effect of IFRS on income inequality through financial development may be because investment increases by improving the efficiency of financial markets and reducing the financial constraints of financial institutions.

Theories of institutional economics emphasize the importance of the method of political governance as a determinant of financial market development. In the economic literature, based on theoretical perspectives, there are two completely different and contradictory perspectives on the impact of democracy on financial development. In fact, in theory, democracy may have a positive or negative effect on financial development. Therefore, empirical studies should be performed on a specific sample to determine the positive or negative relationship. Accordingly, the purpose of this paper is to investigate the relationship between democracy and financial development in the Middle East and North Africa (MENA) using the Panel Smooth Transition Regression (PSTR) model during the period 2002-2021. In this study, a two-regime model with a transfer function and one threshold was determined and the results of estimating the first and second regimes show that democracy in both regimes has a negative and significant effect on financial development and since increasing the numerical values of the democracy index in this study means that the level of democracy is deteriorating, so the results show that improving the level of democracy leads to promoting financial development.

Undoubtedly, it is possible to achieve long-term and continuous economic growth in any country by equipping and optimally allocating investment resources in the national economy of that country, and the role of developed financial markets is necessary to achieve this goal. In fact, the role and importance of the financial system in the development process of countries is such that the difference between developed and developing economies can be found in the degree of efficiency and effectiveness of their financial system. Financial development is a category, which, according to the developments of financial markets, following the discussions of globalization and financial integration after the 70s, was taken into the attention of economists. Therefore, considering the importance of the financial development category in different countries, the study of factors affecting it has always been emphasized. Financial development is a set of factors, policies and institutions that lead to the creation of effective financial markets and financial intermediaries and provide deep and wide access to capital and financial services.

 THEORETICAL FRAMEWORK:

Many factors can influence the development process of financial markets, among which, the role of the combined index of globalization and inflation can be very important. Some economists and economic policymakers, such as Greenaway and Baltaji, believe that globalization leads to better macroeconomic performance and faster financial development in terms of financial and commercial openness, which many empirical studies support this view. International institutions such as the World Bank, the International Monetary Fund, and the Organization for Economic Cooperation and Economic Development advise member countries to believe that commercial and financial liberalization has a positive effect on financial development.

In this research, the non-linear effects of globalization and inflation on the financial development index (facilities granted by the banking system) in Iran during the period 1368 to 2020 have been investigated by using the Markov switching econometric technique. In this study, the dependent variable is financial development, and the independent variables are inflation, globalization, capital stock, and government spending.

In the first regime, the economic dimension of globalization has a positive effect on financial development, which indicates that, due to the increase in the economic dimension of globalization, the index of financial development (facilities granted by the banking system) increases. But in the second regime, the economic dimension of globalization has a negative effect on financial development, which indicates that, due to the increase in the economic dimension of globalization, the index of financial development (facilities granted by the banking system) decreases. Inflation caused by demand pressure and monetary inflation in both regimes has a negative effect on financial development, which indicates that, due to the increase in inflation caused by demand pressure and monetary inflation, the index of financial development (facilities granted by the banking system) decreases.Human capital in both regimes has a positive effect on financial development, which indicates that, due to the increase in human capital, the financial development index (facilities granted by the banking system) increases.In the first regime, capital stock has a positive effect on financial development, which indicates that, due to an increase in capital stock, the index of financial development (facilities granted by the banking system) increases. But in the second regime, ithas no effect on financial development. Government spending in both regimes has a negative effect on financial development, which indicates that, due to an increase in government spending, the financial development index (facilities granted by the banking system) decreases.

CONCLUSIONS & SUGGESTIONS:

The results of the estimates indicate that the sources of inflation (inflation caused by demand pressure and monetary inflation, structural inflation, inflation caused by cost pressure and imported inflation) had a negative effect on financial development in both regimes. Regarding the dimensions of globalization (economic dimension, social dimension and political dimension), we saw a positive relationship in the first regime and a negative relationship in the second regime. In connection with the results of the control variables, the variables of capital stock and human capital in both regimes had a positive effect on banking facilities, but the effect of government spending on banking facilities in both regimes was negative. Now, according to the results, policy proposals are presented as follows:- What can be stated with certainty is that paying attention to globalization and joining international organizations such as the World Trade Organization can help improve the performance of financial development indicators in Iran. Because Iran has a long way to go on the path of globalization and integration into it. Therefore, the economic, political, social and cultural dimensions, especially the political dimension, need a fundamental revision.

Examining the effects of inflation and globalization on changes in the growth rate of financial development components is a topic that has attracted the attention of many researchers in recent decades. This is especially important in developing societies, which are mainly plagued by high inflation rates. The quantitative indicators of inflation, globalization and financial development alone are not informative and effective. For this reason, one of the scientific methods for studying economic data is their statistical modeling using nonlinear tools such as Markov switching technique. This article, while examining the advantages of Markov switching technique, uses this method in the form of an econometric model to study the nonlinear effects of inflation and globalization (crossover effects) on financial development in Iran during the period 1988 to 2019. The results show that in both boom and recession regimes, the combined effects of inflation and globalization have a negative impact on the financial development index (banking credit).

Considering the role of renewable energy sources in the sustainable development process of countries and the significance of economic and political stability in financing renewable energy projects, this research utilizes the Panel Smooth Transition Regression (PSTR) model in various separate models to investigate the impact of systematic risk (including political, economic, and financial risks) on the relationship between financial development (stock market development and banking sector development) and the development of renewable energy technologies (RET) in oil-producing countries (including developing and developed oil-producing countries) during the period from 2000 to 2021. Using nonlinear behavior detection tests, the existence of a nonlinear relationship between financial development and the development of renewable energy technologies was confirmed. The systematic risk variable was chosen as an appropriate transition variable, and a nonlinear panel regression model with a two-regime logistic transition function with a one-time transition was considered as the proposed pattern for this relationship. The overall results of the model estimations indicate that the relationship between financial development and the development of renewable energy technologies varies depending on the level of systematic risk in countries. An increase in the numerical index of risk from its threshold value and entry into the second regime, indicating a reduction in risk levels in countries, enhances the positive impact of financial development on the development of renewable energy technologies. The findings also suggest that in the first regime and at higher risk levels (before the threshold), the banking sector, compared to the capital market, has a greater impact on the development of RET in oil-producing countries. However, in the second regime where the risk level is lower (after the threshold), both the banking sector and the capital market have a positive impact on the development of RET. Additionally, the results show that different indicators of financial development and risk have varying effects on the development of RET in developing and developed oil-producing countries.

The effect of financial development on the economy is so important that today it is believed that economic development cannot be achieved without an efficient and developed financial sector. In this research, to investigate the nonlinear intersectional effects of entrepreneurship and institutional factors on financial development (banking credit and value of trading shares) in 14 countries with high HDI during the time period of 2007-2020 using the panel data econometric technique It is addressed by nonlinear Nonlinear Auto Regressive Distributed Lag (NARDL) approach. The results of the estimations indicate that in the studied countries, the positive (negative) shocks of the intersectional effects of entrepreneurship and institutional factors have a positive (negative) effect on banking credit and value of trading shares. According to the results, first by improving and then by expanding the institutional and entrepreneurship indicators, it is possible to play a significant role in increasing the financial development indicators.

Economic complexity indicates the amount of productive knowledge within a country and the ability to use that knowledge to produce goods with more diversity and less ubiquity, which ultimately increases national competitiveness in the global arena and accelerates the process of achieving economic growth and development. Therefore, determining the factors affecting it - especially in developing countries - is of great importance. In this regard, the present study, by approaching panel data and using the generalized moment method, has determined the interactive effect of entrepreneurship and financial development on economic complexity in two groups of developing and developed selected countries during the period 2014-2019. Estimated results showed that the dimensions of entrepreneurship, including attitudes, abilities & aspirations of entrepreneurial, as well as financial development have a positive and significant effect on economic complexity in both groups of selected countries. However, the estimated coefficient of these variables is larger for developing countries. In addition, the three dimensions of entrepreneurship and financial development have a positive and significant interactive effect on economic complexity in both groups of selected countries. Finally, the effect of the control variables of natural resource abundance and intellectual property rights on economic complexity in both groups of selected countries respectively are negative and significant and positive and significant.

One of the most important goals of the countries, especially developing countries, is economic growth and development. Foreign direct investment along with human capital and financial development are important factors that can have a significant impact on economic growth. Human capital can be used as a facilitator for the transfer of technology related to foreign direct investment. In addition, evidences show that human capital plays a complementary role to the impact of foreign direct investment on economic growth. Technology overflow into domestic companies is also more efficient when financial markets in the host economy are more developed. Therefore, the purpose of this study is to evaluate the short-run and long-run effects of foreign direct investment, human capital and financial development on the economic growth of various income groups in developing countries.

The model used for unsustainable economies (developing countries) is designed to be appropriate for the current study. In this model, the effect of population growth rate and technology, physical capital, human capital, financial development, foreign direct investment, foreign direct investment interaction and financial development and the interaction of foreign direct investment and human capital on economic growth is examined. The statistical population is developing countries in the period 2000-2019. For the study, developing countries were divided into four categories: low-income, lower-middle-income, upper-middle-income, and high-income, which included a total of 27 countries (9 Asian countries, 9 African countries, and 9 South American countries). In this study, first, the significance of variables for developing countries by income groups was investigated. Then, based on the Kao test, the existence of long-run equilibrium relationships among the variables related to the income groups of developing countries was confirmed. FMOLS and DOLS methods were used to investigate the integration.

The results of long-run estimates show that foreign direct investment alone is 0.27 effective on the economic growth of high-income countries, and when combined with human capital and financial development, its impact on economic growth is 0.42 and It will be 0.104. Thus, the effect of the interaction of foreign direct investment and human capital is greater than the effect of foreign direct investment alone on the economic growth of high-income countries. But in other income groups of developing countries, the interaction of foreign direct investment with human capital and financial development has not had a positive effect on economic growth. Also, the results of short-run estimates showed that foreign direct investment alone does not affect the economic growth of high-income countries, but the interaction of foreign direct investment and financial development and the interaction of foreign direct investment and human capital by 0.48 and respectively. 2.13 affects economic growth. This result shows that in the short run, foreign direct investment alone has no effect on economic growth, but along with human capital and financial development have a positive effect on economic growth in these countries. In other income groups of developing countries, the interaction of foreign direct investment with human capital and financial development has not had a positive effect on economic growth. Also, the correct component of the error of foreign direct investment interaction with financial development and human capital shows that in each period, 78% and 95% of the imbalances in the system are eliminated to achieve long-run equilibrium, respectively. But in other income groups, the speed of adjustment is very low or non-existent.

These results show that high-income countries have realized that it is possible to increase productivity due to the high level of human capital and skilled labor through the transfer of new technologies and technology overflows, and this is a positive factor in Economic growth works. Also in high-income developing countries, due to the high institutional capacity in the economic structure that has led to comprehensive efficiency in the mechanism of credit allocation of these countries, the interactive effect of foreign direct investment and financial development on economic growth in the short-run and long –run is positive.