Financial development, globalisation and foreign direct investment nexus: an empirical study from Africa

Iddrisu, Khadijah; Abor, Joshua Yindenaba; Banyen, Kannyiri T.

doi:10.1007/s43546-024-00667-w

Cited by 3 publications

(2 citation statements)

References 53 publications

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“…In short, FDI has an effect on growth that increases with the level of development of the host economy's financial sector. This result is reinforced by the ideas of Iddrisu et al (2024), Krifa-Schneider et al (2022, Lee and Chang (2009), Alfaro et al (2004), and Markusen and Venables (1999), who show that financial development is a prerequisite for the introduction of FDI. Our results are in opposition to those obtained by Asiedu (2002), Hausmann andFernandez-Arias (2000), who claimed that foreign investors are moving more towards financially underdeveloped countries to take advantage of untapped investment opportunities.…”

Section: Dynamic Panel Threshold Estimationmentioning

confidence: 96%

“…Their empirical results reveal that there is no relationship between the quality of governance and economic growth on the one hand and between the quality of governance and FDI on the other, in developing countries. Iddrisu et al (2024) revealed that both financial development and globalization attract FDI in Africa. Bajaj and Bhooshetty (2024) examined the impact of FDI, macroeconomic stability, financial development, human capital, and trade openness on economic growth in the five major G-15 countries over a 33year period from 1989 to 2021.…”

Section: Literature Reviewmentioning

confidence: 99%

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Foreign direct investment and economic growth in Arab countries: do institutions, financial development and human capital matter?

Ochi,

Haous,

Saidi

2024

Preprint

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This study examines the effect of foreign direct investment (FDI) on economic growth, with emphasis on the role of institutional quality, human capital and financial development for Arab countries over the period 2002-2019. We found that the nexus between FDI and growth is nonlinear. By using a dynamic panel threshold model, the results show that there is a statistically positive relationship between FDI and growth above thresholds of 1.8 for human capital, -0.44 for institutional quality and 0.29 for financial development, above which FDI increases economic growth in Arab countries. Based on the results, this research proposes several policy recommendations. JEL Classification numbers : F21, F43, G34, J24, C24

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Section: Dynamic Panel Threshold Estimationmentioning

confidence: 96%

Section: Literature Reviewmentioning

confidence: 99%

Foreign direct investment and economic growth in Arab countries: do institutions, financial development and human capital matter?

Ochi,

Haous,

Saidi

2024

Preprint

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Foreign Bank Presence, Financial Stability, and Income Inequality: Empirical Evidence from Some Selected Countries in Africa

Iddrisu

2024

J Knowl Econ

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FDI, industrialisation and environmental quality in SSA—the role of institutional quality towards environmental sustainability

Jinapor,

Abor,

Graham

2024

Humanit Soc Sci Commun

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In light of the quest to achieve economic development without compromising environmental quality, we empirically examine whether institutional quality (INSQY) can help moderate the possible harmful effects of foreign direct investments (FDI) and industrialisation on environmental quality in sub-Saharan Africa (SSA). We utilise the Driscoll and Kraay standard error estimation technique on a panel of 45 SSA countries from 2000 to 2019. The results indicate that FDI and industrialisation generally have a significant harmful effect on the environment. Our findings reveal that INSQY directly promotes environmental quality. Notably, the results confirm that INSQY plays a stimulating role in mitigating the adverse effects of FDI and industrialisation on environmental quality. The results further validate the environmental Kuznets curve (EKC) hypothesis in SSA. These findings contribute to environmental sustainability literature and offer policymakers insights on how INSQY can enhance environmental quality. Our empirical results are also robust to different estimation techniques, such as the two-stage least squares. We recommend SSA leaders strengthen institutional capacities, enforce environmental regulations, and implement strict policies to ensure environmental quality while promoting industrialisation and FDI inflows.

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Financial development, globalisation and foreign direct investment nexus: an empirical study from Africa

Cited by 3 publications

References 53 publications

Foreign direct investment and economic growth in Arab countries: do institutions, financial development and human capital matter?

Foreign direct investment and economic growth in Arab countries: do institutions, financial development and human capital matter?

Foreign Bank Presence, Financial Stability, and Income Inequality: Empirical Evidence from Some Selected Countries in Africa

FDI, industrialisation and environmental quality in SSA—the role of institutional quality towards environmental sustainability

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