scholarly journals The Growth-Differential Effects of Domestic Investment and Foreign Direct Investment in Africa

2020 ◽  
pp. 139-167
Author(s):  
Victor U. Ijirshar ◽  
Gbatsoron Anjande ◽  
Joseph Fefa ◽  
Bridget N. Mile
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Negative Influence ◽  
Domestic Investment ◽  
Negative Effects ◽  
African Countries ◽  
Differential Effects ◽  
Significant Difference ◽  
Short Run ◽  
Growth Differential

This paper employs dynamic panel models; Pooled Mean Group (PMG) and Mean Group (MG) estimators to assess the growth-differential effects of Foreign Direct Investment (FDI) and Domestic Investment (DI) among 41 selected African countries from 1970 to 2017. The result of Hausman test shows that PMG estimator is preferred. The study found that FDI and DI are important grease for growth of African countries in the long-run. The study also found that inflows of FDI crowds-in DI in Africa and that there is significant difference in the growth effects of foreign direct investment and domestic investment while the joint effects of foreign direct investment and domestic investment on growth of African countries is found to be statistically significant. In the short-run, estimates show that foreign direct investment has negative influence on growth of 24 countries out of which four (Benin, Madagascar, Nigeria and Equatorial Guinea) are highly significant at 5% level, while the estimated influence of domestic investment on growth of most African countries was positive. This shows that foreign direct investment in Africa has negative effects on growth of host economies in the short-run. The study recommends that African governments should continually encourage domestic savings and investment as major source of growth and only consider FDI as a growth supplement.

scholarly journals Does Inward Foreign Direct Investment Promote Export? Empirical Evidence from Sri Lanka

2018 ◽  
Vol 8 (3) ◽  
pp. 1
Author(s):  
Samantha NPG ◽  
Liu Haiyun
Keyword(s):  
Foreign Direct Investment ◽  
Sri Lanka ◽  
Direct Investment ◽  
Export Performance ◽  
Real Effective Exchange Rate ◽  
Domestic Investment ◽  
Long Run ◽  
Short Run ◽  
The Impact ◽  
Bound Test

Export-led growth hypothesis assumed that long-term economic growth can be achieved through higher exports. Foreign Direct Investment (FDI) is one of the determinants of export performance that can have a substitute effect or complementary relationship to export. The aim of this study is to investigate the impact of inward FDI on the export performance of Sri Lanka during the period from 1980 to 2016. Auto Regressive Distributed Lag (ARDL) model and bound test are applied to identify the long-run relationship and short-run dynamics of the selected variables. The short-run causality is checked by applying the Granger causality test. The ARDL bound test confirms long-run relationship among the variables. The study finds positive insignificant long run and short-run relationships between FDI and exports in Sri Lanka for the data period. Exports are highly sensitive to GDP and real effective exchange rate in the short-run and to domestic investment in the long-run. In order to promote exports via FDI, government policy should focus on attracting more FDI by drawing attention to national competitiveness. The study suggests a comprehensive sector level investigation on the impact of FDI on export performance of Sri Lanka.

scholarly journals Slow Growth of Foreign Direct Investment in Central African Republic

2017 ◽  
Vol 18 (6) ◽  
pp. 1435-1446 ◽  
Author(s):  
Yapatake Kossele Thales Pacific
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Central African Republic ◽  
Electricity Production ◽  
African Countries ◽  
Speed Of Adjustment ◽  
Long Run ◽  
Domestic Credit ◽  
Short Run

Large amounts of foreign direct investment (FDI) has been attracted by many African countries. Yet, Central African Republic is by far less attractive in the perspective of potential investors. The aim of this article is to investigate the slow inflows and growth of FDI in the country. In the short and long run, we found out that the gross domestic product growth, the domestic credit to private sector, the electricity production and the quality of public administration are not significant. The error correction mechanism is significant at 0.05 which demonstrates that the speed of adjustment of the model from short run to long run is about 46 per cent. It is very important for the Central African Republic to renovate the national electricity supply company by increasing the hydroelectric production.

scholarly journals Regional Foreign Direct Investment Potential in Selected African Countries

2019 ◽  
Vol 11 (10) ◽  
pp. 66
Author(s):  
Philip Agyei Peprah ◽  
Yao Hongxing ◽  
Jean Baptiste Bernard Pea-Assounga
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Capital Accumulation ◽  
Direct Investment ◽  
Fiscal Decentralization ◽  
African Countries ◽  
Foreign Reserve ◽  
Long Run ◽  
Short Run ◽  
Investment Growth

The recent devolutionary trend across the world has been in part fuelled by claims of a supposed ‘economic growth by direct investment dividend’ associated with the fiscal decentralization. There is however, little empirical evidence to substantiate these claims. Most prior research has determined different research techniques of measurement by generating mix results. More so, these studies do not differentiate between short and long run techniques and mechanisms through which county expenditure affects economic growth, by investment growth, and by foreign reserve of African countries. The background has investigated empirically the short and long run techniques effect of components of county expenditure on economic growth investment, by foreign direct investment growth in the African countries in period of 2013 to 2017. The variables tested by unit root by no stationary at interval levels. The long and short run of variables computed by ARDL methods by Keynesian theory. However, the budget allocation and execution improved to capital infrastructure and like transport communication help to improve private capital accumulation and economic growth.

scholarly journals Quest for Sustainable Growth, Does Foreign Direct Investment Still Matter? Evidence in Africa

2019 ◽  
Vol 7 (4) ◽  
pp. 397-409
Author(s):  
Adewosi, O. Adegoke ◽  
Manu Donga ◽  
Adamu Idi
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Negative Impact ◽  
Political Stability ◽  
Fixed Effect Model ◽  
Sustainable Growth ◽  
Domestic Investment ◽  
African Countries

The debate on the role of Foreign Direct Investment in promoting rapid growth and development of the developing economies remain inconclusive. This paper examined whether FDI still matters in African Countries over the period of 1990 to 2017, with the proper utilization of panel data estimation technique on the annual country data that were sourced from world Governance and Development Indicators. Using random and fixed effect model, the results reveal that some important variables such as coefficient of trade openness, rule of law, political stability, capital formation and population positively determined economic growth in Africa countries, account for about 2, 1, 65, 170, and 396.7 percent increase in economic growth. While, FDI and inflation were found to have negative impact on economic growth accounting for 21.4 and 2 percent fall in economic growth over the study period. The study then recommends amongst others formulation and implementation of policies that encourage domestic investment in the continents.

scholarly journals The effect of mining foreign direct investment inflow on the economic growth of Zimbabwe

2020 ◽  
Vol 9 (1) ◽  
Author(s):  
Plaxedes Gochero ◽  
Seetanah Boopen
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Domestic Investment ◽  
Mining Sector ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Full Effect ◽  
Short Run ◽  
Using Data

Abstract The study employs the autoregressive distributed lag (ARDL) approach to examine the relationship between foreign direct investment (FDI) in the mining sector on the Zimbabwe economy, while controlling for both non-mining FDI and domestic investment. Using data over the period 1988–2018, this research results show that foreign direct investment in the mining sector has a significant positive relationship with the country’s GDP in the long run. Mining FDI is revealed to have relatively higher effects as compared to FDI in non-mining sector and domestic investment. The short-run analysis observed that mining FDI as well as non-mining and domestic investment still has positive and significant impacts on growth but at a relatively lower extent. This implies that it takes some time for such investments to have their full effect on the economy.

scholarly journals The Impact of FDI Inflows, Exports and Domestic Investment on Economic Growth in Africa

2018 ◽  
Vol 10 (4(J)) ◽  
pp. 152-164
Author(s):  
Alexander Maune
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Mean Squared Error ◽  
Domestic Investment ◽  
African Countries ◽  
Socioeconomic Changes ◽  
Research Findings ◽  
The Impact ◽  
The Relationship

The topic regarding the impact of foreign direct investment net inflows, exports and domestic investment on economic growth has resulted in mixed research findings across the globe. Literature related to the above variables in five selected African countries drawn from the five sub-regions is critically reviewed in this article. Furthermore, an econometric analysis of these variables is done to ascertain their impact on economic growth. The findings are compared to previous findings in other studies. The researcher found similar results in some variables when compared to previous researches in other countries. The study found that the independent statistical variables significantly predicted gross domestic product, with F (3, 63) = 5.84, P > F 0.0014, R2 = 0.2176, adjusted R2 = 0.1804 and root mean squared error (RMSE) = 0.54976. The independent variables added significantly to the prediction of p < 0.05. The researcher challenges the notion that the impact of foreign direct investment net inflows, exports and domestic investment on economic growth should always be positive and significant. This study provides a refreshed appreciation of the relationship between foreign direct investment net inflows, exports, domestic investment and economic growth in light of rapid socioeconomic changes in the sampled countries. The article also proposes some critical considerations regarding this relationship.

scholarly journals Foreign Direct Investment and Tourism Development in Africa

2020 ◽  
Vol 25 (4) ◽  
pp. 395-408
Author(s):  
Ogechi Adeola ◽  
Nathaniel Boso ◽  
Ellis L. C. Osabutey ◽  
Olaniyi Evans
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Tourism Development ◽  
Political Stability ◽  
Annual Data ◽  
African Countries ◽  
Fdi Inflows ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

This study examines the nexus between foreign direct investment (FDI) inflow and tourism development. Using annual data for 44 countries in Africa from 1995 to 2014, and three different specifications of panel autoregressive distributed lag model, the study investigates short-run and long-run dynamics between FDI and tourism development. The study finds a significant positive relationship and a bidirectional long-run causality between FDI inflows and tourism development. In addition, the results show a negative short-run relationship between exchange rate and tourism development. Furthermore, there is evidence that economic growth and political stability are important determinants of tourism development. A major policy implication for African countries is that creating a politically stable environment and sustaining a growing economy help attract FDI inflows to boost tourism development.

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