2016
DOI: 10.1002/tie.21791
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Foreign Direct Investment and Economic Growth in SSA: The Role of Institutions

Abstract: This article examines the relationship among foreign direct investment ( FDI ), institutions and economic growth in sub-Saharan Africa in different country environs. We employ a two-step generalized methods of moments estimator with Weidmeijer corrected standard errors and orthogonal deviations to examine the empirical relations. In the full sample, we do not fi nd evidence that FDI promotes growth. We also do not fi nd a signifi cant relationship between institutions and economic growth. Finally, we do not fi… Show more

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Cited by 100 publications
(114 citation statements)
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“…The SGMM estimator is suitable and particularly relevant for this study for several reasons. First, as pointed out by Blundell and Bond (), the SGMM estimator provides an improvement over the DGMM estimator when the dependent variable is highly persistent with the autoregressive term, close to unity and the number of time periods is small (Agbloyor et al, ; Roodman, ). This might fit our study more as our time period is short (26 years) and we have 53 African countries.…”
Section: Methods Of Estimationmentioning
confidence: 98%
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“…The SGMM estimator is suitable and particularly relevant for this study for several reasons. First, as pointed out by Blundell and Bond (), the SGMM estimator provides an improvement over the DGMM estimator when the dependent variable is highly persistent with the autoregressive term, close to unity and the number of time periods is small (Agbloyor et al, ; Roodman, ). This might fit our study more as our time period is short (26 years) and we have 53 African countries.…”
Section: Methods Of Estimationmentioning
confidence: 98%
“…The authors argued that these findings reflect differences in the institutional and policymaking environments between these sets of countries, with the accession economies benefiting from implicit or explicit EU guarantees of democracy and macroeconomic stability. Recently, Agbloyor, Gyeke‐Dako, Kuipo, & Abor () tested the hypothesis that the relationship among FDI, institutional quality, and economic growth may differ based on country characteristics such as the level of financial development and natural resource endowment. Using data for SSA, the results show that the quality of institutions favorably alters the effect of FDI on economic growth countries that do not have developed financial markets.…”
Section: Literature Reviewmentioning
confidence: 99%
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“…After controlling for national gross savings (as a share of GDP); population growth; average number of years of secondary education; trade openness; inflation; age dependency ratio; banking crisis dummy; and the ratio of liquid liabilities to GDP they report negative effect of public debt on economic growth. Moreover, the empirical investigation of Agbloyor et al (2016) on a related subject fail to reject the Panizza & Presbitero (2014) findings that government debts have a negative impact on economic growth. Similarly, Zouhaier and Fatma (2014 p. 445) using Arellano-Bond dynamic panel data estimator explore the effect of debt on economic growth of 19 developing countries over the period 1990-2011.…”
Section: Literature Reviewmentioning
confidence: 96%
“…This generalization has resulted in ideological differences among various economists on the effect of increasing capital flows on macroeconomic indicators. Whereas extant empirical studies (Eberhardt & Presbitero, 2015;Gui-Diby, 2014;Sulaiman & Azeez, 2012;Sedik & Sun, 2012;Mody & Murshid, 2011;Aizenman & Spiegel, 2006;Sachs et al, 2004) support this assertion; other evidences especially from Sub-Saharan Africa (SSA) suggest contrasting results in the absence of some mitigating factors (Mensah, Bokpin, & Boachie-Yiadom, 2018;Agbloyor, Gyeke-Darko, Kuipo, & Abor, 2016;Zouhaier & Fatma, 2014;Panizza & Presbitero, 2014;DiPeitro & Anoruo, 2012;Presbitero, 2008).…”
Section: Introductionmentioning
confidence: 99%