Economic Growth and Foreign Direct Investment Transnational Exploration in Africa Using Panel Integration and Panel Estimation

Mamoudou Seyni, Rwiza Edith

Abstract


The existing macroeconomic literature on the link between foreign direct investment and growth has identified the potential gains from FDI for recipient countries only if they reach a threshold level of absorptive capacity. The present study made an effort in this direction to determine whether FDI affects economic growth based on panel data for 20 African economies over the period 2010-2020. Investment and economic growth. The results strongly suggest that although FDI improves growth in Africa, the extent of its impact depends on absorptive capacity thresholds measured by levels of human capital and infrastructure. African economies that meet these thresholds can only reap the benefits of FDI. This study therefore provides compelling evidence of the synchronized efforts of African economies to attract FDI for their economic growth.


Keywords


FDI; Economic growth; Estimation; Integration; Panel

Full Text:

PDF

References


Adewumi, S. (2006). The impact of FDI on growth in developing countries: An African. Sweden. Jonkoping International Business School.

Agosin, M. R. (2000). Foreign investment in developing countries: Does it crowd in domestic investment ? United Nations Conference on Trade and Development Discussion Papers No 146 , 1-16.

Aleksynska, M., Gaisford, J., & Kerr, W. (2003). Foreign direct investment and growth in transition economies. MPRA Paper No. 7668.

Alexander (2000). Infrastructure restructuring and regulation: Building a base for sustainable growth. Policy Research Working Paper Series No 2415 Washington DC .

Alfaro, L. ( 2003). Foreign direct investment and growth: Does the sector matter? Harvard Business School Working Paper.

Ali Yousif, Y. (2002). Financial development and economic growth: Another look at the Evidence from Developing Countries. Review of Financial Economics, II, 131-150.

Asteriou, D. a. (2007). Applied econometrics: A modern approach using eviews. Hampshire, UK and New York, USA: Palgrave Macmillan.

Athreye, S. a. (2002). Private foreign investment in India: Pain or panacea? World Economy 24(3) , 399-424.

Bank, T. W. (2008). World bank indicators. The World Bank.

Barro, R. a.-I.-M. (1995). Economic growth. Cambridge, MA: McGraw Hill.

Barro, R. a.-I.-M. (1997). Technological diffusion, convergence, and growth. Journal of Economic Growth 2(1) , 1-27.

Basu, P. C. (2003). “Liberalization, FDI, and growth in developing countries: A panel cointegration approach. Economic Inquiry 41(3) , 510-516.

Berg, R. a. (2006). FDI and economic growth : A time-series approach. Global Economy 6(1).

Blomstrom, M. a. (1992). Host country competition and technology transfer by multinationals. NBER Working Paper No 4131.

Borensztein, E. J. (1998). How does foreign direct investment affect economic growth? Journal of International Economics, 45, 115-35.

Canning, D. a. (2000). The socail rate of return on infrastructure investment. Reerch Policy Working Paper Series No 2390 Washington DC.

Carkovic, M. a. (2002). Does foreign direct investment accelerate economic growth ? University of Minnesota, Working Paper.

Cheng, L. K. (2000). What are the determinants of the location of Foreign Direct Investment ? The Chinese Experience. Journal of International Economics 51 , 379-400.

Chowdhury, A. a. (2006). FDI and growth: What causes what? The World Economy 29(1), 9-19.

De Gregorio, J. (1992). Economic growth in Latin America. Journal of Development Economics, 39, 59-84.

De Mello, J. (1999). Foreign direct investment- led growth: evidence from time series and panel data. Oxford Economic Papers, 51(1), 133-151.

Dickey, D. a. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica, 49(4), 1057-1072.

Dunning, J. H. (1977). Trade, location of economy activity and the MNE: A search for an eclectic approach. In B. O. al., International allocation of economic activity (pp.395-418). London: Holmes and Meier.

Durham, J. (2004). Absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth. European Economic Review, 48, 285-306.

Frankel, J. a. (1999). Does trade cause growth? The American Economic Review, 89(3), 379-399.

Goldsmith, R. (1969). Financial structure and development. New Haven: Yale University Press.

Granger, E. A. (1987). Cointegration and error correction: Representation, estimation and testing. Econometrica, 55, 255-286.

Harris, R. A. (2003). Applied time series modeling and forecasting. Chickester UK: Wiley Publications.

Haug, A. (1996). Tests for cointegration: A Monte Carlo comparison. Journal of Econometrics, 71, 89-115.

Hausman, J. (1978). Specification tests in econometrics. Econometrics, 46(6), 1251-1271

Herzer, et.al (2008). In Search of FDI-led growth in developing countries: The way dorward. Economic Modelling 25 , 793-810.

Im, K. S. (2003). esting for unit roots in heterogeneous panel. Journal of Economics, 115(1), 53-74.

Kaushik,. et.al. (2008). Export growth, instability,investment and economic growth in India: A time series analysis. Journal of Developing Areas.

K.H.L, Z. (2001). Foreign direct investment promote economic growth? Evidence from East Asia and Latin America. Contemporary Economic Policy, 19, 175-85.

Krugman, P. ( 1998). What happened in Asia? Retrieved from MIT, Cambridge, Massachusetts.: http://www.web.mit.edu/krugman/www/DISINTER.html.

Kumar, N. (1995). Industrialization, liberalization and two way flows of foreign direct investments: The case of India. Discussion Paper series No. 9504, The United Nations University, INTECH.

Levine, R. (1997). Financial development and economic growth: Views and agenda. Journal of Economic Literature, 35, 688-726.

Lim, C. C. (2000). Contribution of private foreign investments in the Malaysian manufacturing sector 1977-1995. Maisom. contribution of private foreign investments in the Malaysian manufacturing sector 1977-1995. Faculty of Economics and Management Working Paper, Universiti Putra Malaysia, Malaysia.

Corden, M. (1999). The Asian crisis: Is there a way out ? Institute of South East Asian Studies Singapore.

Markowski, J. A. (1995). The attractiveness of countries to foreign direct investment: Implications for the Asia-Pacific Region. Journal of World Trade, 29, 159-79.

Nurkse, R. (1953). Problems of capital formation in underdevelopment countries. OUP.

OECD. (2002). Foreign direct investment for development: Maximising benefits, minimising costs : An overview. Organisation for Economic Co-Operation and Development.

Olofsdotter, K. (1998). Foreign direct investment, country capabilities and economic growth. Review of World Economics, 134(3), 534-547.

Pedroni, P. (2001). Purchasing power parity tests in cointegrated panels. The Rev. Econ. Statistics, 83(4), 727-731.

Perron, P. (1988). Trends and random walk in macro time series: Evidence from a new approach. Journal of Economic Dynamics and Control, 12, 297-332.

Rajan, R. (2004). Measures to attract FDI: Investment promotion, incentives and policy intervention. Economic and Political Weekly , 12-16.

Rand, H. a. (2006). On the causal link between FDI and growth in developing countries . The World Economy,Wiley Blackwell, 29(1) .

Reinikka, R. A. (1999). How inadequate provision of piblic infrastructure affects private investment ? . Policy Research Working Paper Series No 2262 , Washington DC.

Romer, P. (1990). Endogenous technological change. The Journal of Political Economy 98(5), 71-102.

Sahoo, P. (2006). Foreign direct investment in South Asia: Policy, trends, impact and determinants. ADB Institute, Discussion Paper No. 56.

Sala-I-Martin, X. (2002). 15 years of new growth economics: What have we learnt ? Journal Economia Chilean, 5(2), 5-15.

Schumpeter, J. (1911). The theory of economic development: An inquiry into capital,profits,credit,interest and business cycle. Cambridge Mass: Harvard University Press.

Shaw, E. (1973). Financial deepening in economic development. New York: OUP.

Taylor, A. a. (1999). On the definitions of cointegration. Journal of Time Series Analysis 20(2) .

Toda, H. a. (1995). Statistical inference in vector autoregression with possibly integrated processes. Journal of Econometrics, 66(1-2), 225-250.

UNCTAD (1999). Egypt: Investment policy review. Switzerland, United Nations.

Woolridge. (2003). Introductory econometrics: A modern approach. Mason Thomson.

World Bank (1994).World development report: Infrastructure for development. OUP

Yusop, Z. (1992). Factors influencing foreign direct investment in the manufacturing sector of Malaysia. Unpublished Master Thesis, Universiti Putra Malaysia, Malaysia.

Zhang, K. (2001). Does foreign direct investment promote economic growth? Evidence from East Asia and Latin Americ. Contemporary Economic Policy, 19(2) , 175-185.




DOI: http://dx.doi.org/10.3968/12147

Refbacks

  • There are currently no refbacks.


Copyright (c) 2021 Canadian Social Science

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Reminder

  • How to do online submission to another Journal?
  • If you have already registered in Journal A, then how can you submit another article to Journal B? It takes two steps to make it happen:

1. Register yourself in Journal B as an Author

  • Find the journal you want to submit to in CATEGORIES, click on “VIEW JOURNAL”, “Online Submissions”, “GO TO LOGIN” and “Edit My Profile”. Check “Author” on the “Edit Profile” page, then “Save”.

2. Submission

Online Submission: http://cscanada.org/index.php/css/submission/wizard

  • Go to “User Home”, and click on “Author” under the name of Journal B. You may start a New Submission by clicking on “CLICK HERE”.
  • We only use four mailboxes as follows to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases: [email protected]; [email protected]; [email protected]; [email protected]

 Articles published in Canadian Social Science are licensed under Creative Commons Attribution 4.0 (CC-BY).

 

Canadian Social Science Editorial Office

Address: 1020 Bouvier Street, Suite 400, Quebec City, Quebec, G2K 0K9, Canada.
Telephone: 1-514-558 6138 
Website: Http://www.cscanada.net; Http://www.cscanada.org 
E-mail:[email protected]; [email protected]

Copyright © Canadian Academy of Oriental and Occidental Culture