Do Official Development Aid and Foreign Direct Investment Promote Good Governance in Africa?

2011 ◽  
pp. 141-170
Author(s):  
Adugna Lemi
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Good Governance ◽  
Development Aid ◽  
Official Development Aid

Do Financial Flows Make a Difference in Fragile States?

2021 ◽  
pp. 449-492
Author(s):  
Ralph Chami ◽  
Ekkehard Ernst ◽  
Connel Fullenkamp ◽  
Anne Oeking
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Poverty Reduction ◽  
Development Aid ◽  
Positive Contribution ◽  
Fragile States ◽  
Decent Work ◽  
Financial Flows ◽  
Weak Institutions ◽  
Official Development Aid

A rising number of people is living in fragile countries whose weak institutions fail to deliver on decent work and poverty reduction. The chapter discusses to what extent external financial flows, such as remittances, foreign direct investment or official development aid, can substitute for weak institutions. Fragility matters: fragile countries receive different amounts of financial flows than their non-fragile peers, and these flows affect them differently. Fragility lowers the effect of financial flows on growth, living standards and inequality. Foreign direct investment (FDI) has a moderate impact on poverty alleviation, albeit concentrated on employment gains in mining and natural resources. Remittances provide some weak relief for the poor, with less pernicious effects on growth and labour supply than in non-fragile countries. ODA does not improve social outcomes but rather exacerbates fragility. Policymakers should focus on improving upon the positive contribution of FDI and remittances on jobs and growth, avoiding the remittances trap.

scholarly journals Illicit financial flows and foreign direct investment in developing countries

2016 ◽  
Vol 6 (4) ◽  
pp. 442-447
Author(s):  
Emmanuel Innocents Edoun ◽  
Alexandre Essome Dipita ◽  
Dikgang Motsepe
Keyword(s):  
Foreign Direct Investment ◽  
Interest Rates ◽  
Tax Evasion ◽  
Local Governments ◽  
Direct Investment ◽  
Good Governance ◽  
Transfer Pricing ◽  
Developed Countries ◽  
Financial Flows ◽  
Illicit Financial Flows

Africa is facing a number of challenges that are negatively affecting socio-economic development at all levels of governments and local governments are expected to play a leading role for Africa’s development. One of these challenges are illicit financial flows that are perceived by many as a crime against Africa’s transformation. The continent is losing billions of dollars every year because of tax evasion, corruption and inappropriate transfer pricing and maladministration. With tax being one of Africa’s main sources of revenue, current and past researches revealed that, illicit financial flows (IFFs) cripple African Governments tax base as a results of capital outflows and lack of good governance. This situation obviously is a challenge for Africa’s development as governments struggle to finance structuring projects and this in turn compels these governments to seek funds from international organisations at very high interest rates. It is also important to reveal that Foreign Direct Investment (FDI) rapidly grew after the Second World War with the intention to maximize profit on investment in less developed countries and specifically in the African continent. In competing in Africa, most multinationals main objective is to pay less tax, make extensive profits and transfer the proceeds to their country of origin. This subsequently gave rise to illicit financial flows in Africa where the continent is losing billions of dollars. Past studies equally revealed that, Africa’s revenue could increase between 55 and 65%, if appropriate mechanisms of monitoring the flows were in place. This study therefore is based on the premise that, tax evasion, illicit financial flows, corruption and abusive transfers pricing are all factors that affect Africa’s development. Using appropriate method of inquiry, this study wants to demonstrate the presence of FDI’s in Africa as a modus operandi behind tax evasion. It also using the “Appropriability Theory” to explain the rationale for FDI in Africa.

DO INTERNATIONAL FLOWS INCREASE ENROLLMENT RATES?

2015 ◽  
Vol 20 (4) ◽  
pp. 1051-1072
Author(s):  
Arusha Cooray
Keyword(s):  
Foreign Direct Investment ◽  
Government Policy ◽  
Direct Investment ◽  
Time Lag ◽  
Financial Sector ◽  
Development Aid ◽  
Enrollment Rates ◽  
The Impact ◽  
Positive Effect ◽  
Overseas Development

This study examines the influence of foreign direct investment (FDI), overseas development aid (ODA), and remittances on the enrollment of girls and boys in 103 countries over the years 1970–2011. The results suggest that remittances have a contemporaneous robust significant influence on enrollment, with the positive effect being slightly higher for girls than for boys. FDI and ODA have an influence on the enrollment of girls and boys only after a significant time lag. The results also suggest that the impact of remittances on enrollment is increased through income and a well-developed financial sector; FDI through better institutions and a well-developed financial sector; and ODA through better government policy.

Effect of volatility of development aid on volatility of foreign direct investment inflows

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sena Kimm Gnangnon
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Development Aid ◽  
Fdi Inflows ◽  
Content Type ◽  
Depth Analysis ◽  
Long Time ◽  
Coordination System ◽  
Coordination Systems ◽  
Aid Coordination

Purpose This paper aims to examine the effect of development aid volatility on foreign direct investment (FDI) volatility in aid recipient countries. Design/methodology/approach The empirical analysis has relied on a sample of 117 countries over the period 1981–2016 and used the two-step system generalized methods of moments (GMM) approach. Findings The findings indicate that development aid volatility exerts a positive and significant effect on FDI volatility, with the magnitude of this positive effect rising as countries’ real per capita income increases. Furthermore, development aid volatility is non-linearly related to FDI volatility, as additional rises in the degree of development aid volatility further amplify FDI volatility. Research limitations/implications These outcomes highlight that volatility of development aid inflows enhances the volatility of FDI inflows. Thus, the enhancement of the aid coordination system between donor-countries and recipient-countries would not only help mitigate the volatility of aid – which reduces the macroeconomic effectiveness of aid – but also stabilizes FDI inflows to developing countries. Practical implications A limitation of the present paper is its reliance on aggregate FDI inflows to perform the analysis. Availability of data on greenfield FDI inflows and cross-border mergers and acquisitions FDI inflows over a long-time-period would provide an opportunity to conduct an in-depth analysis of the volatility of development aid on FDI inflows volatility. Furthermore, it could be interesting to investigate in the future (if data is available) the extent to which aid coordination systems between donor-countries and recipient-countries versus recipient-countries’ domestic factors contribute to explaining the dynamics of FDI inflows volatility in recipient-countries of these two types of capital flows. Originality/value To the best of the authors’ knowledge, this topic has not been addressed in the literature.

scholarly journals African Asylum Seekers in Europe: The Interplay between Foreign Aid and Governance in Origin Countries

2021 ◽  
Author(s):  
Jordi Ripollés ◽  
Inmaculada Martínez-Zarzoso
Keyword(s):  
European Union ◽  
Foreign Aid ◽  
Asylum Seekers ◽  
Good Governance ◽  
Developed Countries ◽  
Development Aid ◽  
The European Union ◽  
Trust Fund ◽  
Governance Quality ◽  
Official Development Aid

AbstractThis paper empirically investigates the effects of governance quality on the number of African asylum seekers in Europe over the period 1996–2018 and evaluates the extent to which official development aid acts as a catalyst. With this purpose in mind, different gravity model specifications and estimation approaches have been employed. The obtained results suggest that the asylum flows are strongly determined by governance quality in the country of origin and that this effect does depend on the amount of foreign aid received from developed countries. Moreover, it is also found that development aid is only effective in reducing asylum applications coming from countries with good governance. Moreover, we find no differences in the estimated elasticity of foreign aid on asylum claims for the beneficiaries of the European Union Emergency Trust Fund (EUTF) for Africa, the main aim of which has been to improve living conditions of potential migrants in their countries of origin.

scholarly journals Sustainability and Society: Do Environmental, Social, and Governance Factors Matter for Foreign Direct Investment?

Energies ◽  
2021 ◽  
Vol 14 (19) ◽  
pp. 6039
Author(s):  
Niranjan Chipalkatti ◽  
Quan Vu Le ◽  
Meenakshi Rishi
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Good Governance ◽  
Current Trend ◽  
Sustainability Reporting ◽  
Sustainable Growth ◽  
Future Research ◽  
Middle Income ◽  
Fdi Inflows ◽  
Low And Middle Income

Sustainable investing allocates investments based on environmental, social and governance factors (ESG). The societal value of sustainable investment is becoming progressively relevant as investors are increasingly recognizing the importance of investing in companies that seek to combat climate change, environmental destruction, while promoting corporate responsibility. Environmental policy and sustainable growth initiatives at a country-level are also being influenced by the UN’s Sustainable Development Goals (SDGs). Situated within the current trend of declining foreign direct investment flows (FDI), our study examines the role of ESG factors in attracting FDI and enabling progress toward SDGs. We econometrically examine the linkages between ESG and FDI inflows for a sample of 161 counties. We also focus on low- and middle-income emerging economies and low- and middle-income commodity exporters as these countries face unique challenges of mobilizing financing to achieve SDGs and generating sustainable economic growth. Results suggest that FDI inflows to the full sample of countries are positively attracted by good governance in a destination country. We observe that good scores on HDI deters FDI, that higher FDI flows are associated with higher levels of carbon emissions in the case of emerging markets. Sustainability reporting attracts FDI to commodity exporting countries. The study provides possibilities for future research in a post-pandemic future.

scholarly journals Determinants of Economic Growth in Organization of Islamic Cooperation with Governance Index as a Moderating Variable

2021 ◽  
Vol 04 (08) ◽  
Author(s):  
Akmal Ihsan ◽  
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Good Governance ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Negative Influence ◽  
Statistical Testing ◽  
Governance Index ◽  
Determinants Of Economic Growth

This study seeks to explore and investigate the influence of foreign direct investment, remittances, and trade openness on economic growth in the Organization of Islamic Cooperation with governance index as a moderating variable in 2005-2019. Moderated Regression Analysis analysis is used to analyze governance index variables. The use of Generalized Least Square and Generalized Method of Moments is used to determine which method is best. Sargant level of significance and value showed GMM more precisely in this study. The results of statistical testing show that all independent variables have a significant positive influence on economic growth except foreign direct investment which has a significant negative influence. This negative influence is due to the instability of investment flows. In addition, governance index can moderate foreign direct investment, remittances, and trade openness in its influence on economic growth.Thus, it can be concluded that to increase economic growth, the need for good governance index so that economic growth in the Organization of Islamic Cooperation is increasing.

scholarly journals The Determination of Economic Freedom in Foreign Direct Investment Inflows to the Balkans States and Turkey

2014 ◽  
Author(s):  
Bedriye Tunçsiper ◽  
Ömer Faruk Biçen
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Economic Freedom ◽  
Development Aid ◽  
Growth Potential ◽  
Time Dimension ◽  
Domestic Markets ◽  
The Balkans

Foreign direct investment (FDI) are an important external savings resource for the developing countries that have problems with financing of growth and development. The transformation that started in the global economic system from 1980’s substituted other capital types, major of them are FDI, instead of official development aid. Nevertheless, the foreign direct investment pulling competition have started among developing countries. The papers in this side imply that the countries having broad domestic markets, high economic growth potential, an improved infrastructure and human capital level have advantages on pulling FDI. Moreover, some papers in last years reflect that economic freedom is also an important determinative in addition to other determinatives of FDI. The main aim of this paper is to analyze the determination of economic freedom on the FDI that inflow to the Balkan states and Turkey. In the paper using 1994-2012 time dimension, the countries added to the analysis are Turkey, Bulgaria, Greece, Romania, Macedonia, Albania and Croatia. The results with panel regression method showed that some economic freedom indices supported the inflows of FDI in this countries.

scholarly journals WHEN IT RAINS, IT POURS: FOREIGN DIRECT INVESTMENT AND PROVINCIAL CORRUPTION IN VIETNAM

2019 ◽  
Vol 19 (2) ◽  
pp. 141-168
Author(s):  
Yong Kyun Kim
Keyword(s):  
Foreign Direct Investment ◽  
Strong Evidence ◽  
Direct Investment ◽  
Quantitative Data ◽  
Good Governance ◽  
Qualitative And Quantitative ◽  
Host State ◽  
Control Of Corruption

AbstractDoes foreign direct investment (FDI) promote or hinder good governance in a host state? In this article, I analyze the effects of FDI on subnational-level corruption across 63 provinces in Vietnam and find that FDI has both promoted and hindered control of corruption. Initially, FDI creates resources and incentives to improve governance and reduce corruption for early winner provinces. Yet, once FDI begins to pour in, different dynamics start to take effect. While the resources and incentives accrued to FDI-recipient provinces become less effective in further curbing corruption as more FDI flows in, FDI provides leaders of those provinces with growing opportunities and increased abilities to seek and pursue rents, leading to a prevalence of corruption. Using both qualitative and quantitative data, I find strong evidence that the control of corruption is weakest at the extremes: in provinces with the least and the most FDI.

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