Macroeconomic and institutional conditions: the drivers behind divestment of FDI in Sub-Saharan Africa

Edo, Samson; Nnadozie, Obianuju

doi:10.1108/jcefts-03-2022-0016

Cited by 6 publications

(5 citation statements)

References 50 publications

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“…AGFD is measured as the negative of the agricultural net inward FDI. The recognition of AGFD as the negative of the net AGFDI inflow has been acknowledged by the United Nations [50][51][52] and others [24,53,54]. FD is measured by the balance of payments (BOP) and the directional (DA) approaches [55].…”

Section: Model and Modellingmentioning

confidence: 99%

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Divestment of foreign direct investment and domestic investment in developing countries agriculture

Badu-Prah,

Srofenyoh,

Gidiglo

et al. 2024

Sustain. Econ.

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Divestment of foreign direct investment has accompanied foreign direct investment. The literature on the interface of foreign direct investment and domestic investment in the agricultural sector is limited. None of these addressed the effect of agricultural foreign divestment on agricultural domestic investment. This paper filled this gap by assessing the direction and extent of the effect of agricultural foreign divestment on agricultural domestic investment in developing countries. The panel data of 50 countries, covering 1995 to 2020 and making up 619 observations, was fitted to fixed and random effects as well as generalised estimation equation estimators. We found agricultural foreign divestment crowded out agricultural domestic investment in developing countries. Economic managers in developing countries must work towards strong macroeconomic indicators, as these have collateral benefits for enhancing agricultural domestic investment.

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Section: Model and Modellingmentioning

confidence: 99%

“…Existing literature has shown that the drivers of IFDI are the macroeconomic factors such as inflation, exchange rate, trade, and savings rate among others [66][67][68][69]. Also, these factors drive the divestment of IFDI [53,70]. Economic managers in developing countries must, therefore, keep their fingers on these indicators.…”

Section: Policy Implicationsmentioning

confidence: 99%

Divestment of foreign direct investment and domestic investment in developing countries agriculture

Badu-Prah,

Srofenyoh,

Gidiglo

et al. 2024

Sustain. Econ.

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“…Various foreign divestment theories such as the eclectic paradigm, divestiture, institutional-based view, real options and neoclassical, have been employed by scholars to better understand foreign divestment (see Matekenya & Moyo, 2023;Konara & Ganotakis, 2020;Arte & Larimo, 2019;Musshoff, Odening, Schade, Maart-Noelck & Sandri, 2013;Edo & Nnadozie, 2023). The theoretical foundation of this paper is derived from the existing literature on foreign divestment.…”

Section: Conceptual and Theoretical Reviewmentioning

confidence: 99%

“…The real options theory suggests that subsidiaries can add value in uncertain international markets and host country conditions (Belderbos & Zou, 2009). Finally, neoclassical theory suggests that return on investment significantly influences capital flows across countries, with high returns in low-capital countries attracting investment towards poorer nations (Edo & Nnadozie, 2023).…”

Section: Conceptual and Theoretical Reviewmentioning

confidence: 99%

Foreign divestment, financial development, and economic growth nexus in selected African countries: Autoregressive Distributed Lag (ARDL) Approach

Maduane-Komape,

Tshehla

2024

IJRBS

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There is a limited amount of literature and data available on the topic of foreign divestment in African countries. The majority of research examining international divestment have primarily concentrated on a single-country context and have utilised factors at the level of individual firms. Unlike other papers, this study took a comprehensive approach by examining foreign divestiture across multiple countries on a continental scale. We analyse the correlation between foreign divestment, financial development, and economic growth over both short and long periods using annual data from 2000 to 2020 in 35 African nations. The principal estimating technique employed was the autoregressive distributed lag (ARDL) co-integration approach. The study's primary findings revealed a favourable enduring correlation between foreign divestiture and financial development, while indicating an unfavourable enduring correlation between foreign divestment and economic growth. Furthermore, the study found that there is a negative correlation between international divestiture and financial development in the short term. On the other hand, there is a positive and significant correlation between foreign divestment and economic growth. Thus, it is imperative for policymakers to implement rules with efficiency and promote foreign direct investment (FDI) inflows in order to enhance economic growth and development in African countries. Additionally, it is imperative for authorities to establish a surveillance system to monitor these connections and adapt policy accordingly in light of evolving economic conditions. The results of this study will not only enhance scholarly discussions, but also offer valuable insights to policymakers, practitioners, businesses, and foreign investors on how to effectively execute policies that promote economic growth and foreign investment in Africa. Moreover, this study provides suggestions for future investigations in the field of foreign divestment.

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“…Sartor and Beamish (2020) stated that multinational corporations find it more difficult to manage and control the behaviour of their subsidiaries when dealing with increased levels of political corruption, which increases the likelihood that they will divest. Edo and Nnadozie (2022), on the other hand, examined the institutional conditions for FDI divestment in Sub-Saharan Africa, suggesting the opposite impact. The empirical findings show that in Sub-Saharan Africa, poor institutional quality accelerates outflows and drives divestment.…”

Section: Literature Reviewmentioning

confidence: 99%

Food security and political instability-foreign divestment analysis

Subramaniam

Loganathan

Masron

2023

JCEFTS

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Purpose Prior studies have found evidence for the role of political instability on foreign divestment (FD) where a high level of instability encourages FD decisions. Therefore, this paper aims to examine how the food security level explains the linkage between political instability and FD. Design/methodology/approach The current study adopts the system generalised method of moment (GMM) to achieve accurate and reliable empirical evidence for 60 developing countries in the period 2011 to 2020. Findings The results demonstrated a negative and significant relationship between political instability and FD on food security. This suggests that political instability’s impact on divestment tends to be lower in countries with better levels of food security. Other controlled variables, such as economic growth, human capital and trade openness, also have a negative effect on FD, discouraging FD. Practical implications As a result, policymakers could take steps to ensure that food security levels reach acceptable levels, as food security has been linked to a country’s political stability. Originality/value To the authors limited knowledge, no studies have looked at the relationship between political instability and food security in determining a country’s FD. Our study aims to analyse this issue because the current global crisis, which is being caused by high food prices, will push millions of more people into severe poverty and exacerbate hunger and malnutrition

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Macroeconomic and institutional conditions: the drivers behind divestment of FDI in Sub-Saharan Africa

Cited by 6 publications

References 50 publications

Divestment of foreign direct investment and domestic investment in developing countries agriculture

Divestment of foreign direct investment and domestic investment in developing countries agriculture

Foreign divestment, financial development, and economic growth nexus in selected African countries: Autoregressive Distributed Lag (ARDL) Approach

Food security and political instability-foreign divestment analysis

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