Modelling composition of growth, FDI and welfare in Africa: a SEM approach

Chukwu, Anayochukwu Basil; Adewuyi, Adeolu O.; Adeleke, Adebowale M.; Awodumi, Olabanji Benjamin; Agbanike, Tobechi F.

doi:10.1007/s10644-022-09390-8

Cited by 6 publications

(3 citation statements)

References 52 publications

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“…These ndings are supported by the study from Osabutey and Jackson (2019) who asserted the fact that developing countries can leverage FDI to boost their technological adoption in production. In line with these ndings, Chukwu et al (2022) noted in earlier studies that the bene ts of technological adoption and advancement from FDI improve the operations and e ciency of production in diverse areas of the economy in terms of manufacturing and production capabilities.…”

Section: Results Analysis Andsupporting

confidence: 72%

Unleashing technological advancements through foreign direct investments in West Africa's non-oil manufacturing sectors

Mantey

2024

Preprint

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This paper explores the potential of Foreign Direct Investments (FDI) to drive technological advancements and promote sustainable growth in West Africa's non-oil manufacturing sector. The purpose of the study is to evaluate and ascertain the technological advancement that has been accompanied by FDI in West African countries. This study uses the FDI dataset of 5 West African countries and adopts the panel data analysis that spans from 1990 – 2022 to evaluate the factors that contribute to the diffusion and adoption of technological innovation. Data were sourced from the World Bank, International Monetary Fund, and Investment Promotion centers of selected countries. Findings from the study showed that factors that contribute to the diffusion and adoption of technological innovation come from FDI, political indicators, and Gross Domestic Product (GDP). Thus, there is a positive relationship between FDI and GDP on technological diffusion and adoption; the higher the FDI and GDP size the more improved the adoption and diffusion of technology in the specific market across the continent. The negative relationship between political stability and technology diffusion proves that the lower the occurrence of terrorism or political turmoil the higher the adoption of technology in manufacturing. The study recommends the need for governments to improve political stability and set up technology hubs and clusters to facilitate knowledge sharing and collaboration to absorb technology diffusion in their respective economies. JEL Codes: F2, L6, O33

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Section: Results Analysis Andsupporting

confidence: 72%

Unleashing technological advancements through foreign direct investments in West Africa's non-oil manufacturing sectors

Mantey

2024

Preprint

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“…In certain instances, foreign firms particularly engage in environmental practices as part of their corporate social responsibility to encourage domestic firms to be environmentally friendly in their activities. Thus, foreign direct investment (FDI) offers least expensive channel of direct and indirect technology transfer and allows intra-industry knowledge spillover to developing countries (Damijan et al 2003 ; Chen et al 2017 ; Chukwu et al 2022 ). However, internal capabilities are generally weak, in these countries (Ning et al 2016 ).…”

Section: Theoretical Framework and Methodologymentioning

confidence: 99%

Does foreign direct investment matter for environmental innovation in African economies?

Awodumi¹

2022

Econ Change Restruct

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This study investigates the role of foreign direct investment (FDI) in environmental innovation in Africa during 1990–2019. It utilizes the endogenous growth theory to specify an innovation production function, estimated using the seemingly unrelated regression (SURE) method. The study employs four indicators of environmental innovation and also controls for the influence of resource abundance. Key findings from the study show evidence that FDI inflow enhances environmental innovation practices by improving resource efficiency outcomes. In particular, FDI is found to reduce greenhouse gas emission intensity of output and carbon intensity of energy. Further, the effect of FDI on resource utilization and energy productivity is insignificant. Estimates confirm the learning and imitation, and demonstration effects of FDI on resource utilization, though the formal effect is detrimental. The labour market effect is revealed to promote resource efficiency, while resource abundance plays negligible role in environmental innovation in all models. Policy implications are derived.

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“…Thus, output growth of sector i in country j depends on the countrywide poverty level (or human development) and FDI, while poverty (or human development) is also a function of SOP (Baldacci et al, 2008). Both HDI and SOP are also affected by the level of capital formation (INV), population growth (POPG), and trade openness (TOPEN) of the economy (Basu & Guariglia, 2007; Jahanger et al, 2022), while governance institution (GOV), proxied by rule of law, is critical to poverty outcomes (Chukwu et al, 2022; Gohou & Soumaré, 2012; Wu & Hsu, 2012). Measuring the sectoral variable i ( i = 1…3) for country j ( j = 1…23) at time t ( t = 1996…2020), and macroeconomic variables for country j at time t , a system of simultaneous relationships can be established as follows:

{HDI}_{italicit} = f ({SOP}_{ijt}, {FDI}_{it}, {INV}_{it}, {POPG}_{it}, {TOPEN}_{it}, {GOV}_{it}),

{SOP}_{italicijt} = f ({HDI}_{it}, {FDI}_{it}, {INV}_{it}, {POPG}_{it}, {TOPEN}_{it}, {GOV}_{it}),

where i in SOP ijt is defined for the agricultural, service and manufacturing output performance (ManP) as AgricP, SerP and ManP, respectively.…”

Section: Theoretical Framework and Methodologymentioning

confidence: 99%

Foreign direct investment, sectoral output performance and poverty in Africa: Evidence from panel structural vector autoregressive and threshold regression models

Chukwu¹,

Adewuyi

2023

Int. J Fin Econ

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African countries are faced with many challenges, which have hindered growth and development, yet they are unable to implement policies to attract adequate external funding for addressing their growth and development challenges. Using a cross‐sectional panel data of 23 African countries, spanning 1996–2020, this study applied a novel panel structural autoregressive model and a modification of the recently introduced dynamic threshold model to analyse the foreign direct investment (FDI)‐growth‐poverty relationship at sectoral level. The study accounted for heterogeneity, simultaneity bias and cross‐sectional dependence in the modelling exercise. Findings suggest that shocks in FDI produced significant positive impact on manufacturing and services output performances in Africa in the short‐term. However, shocks in FDI did not stimulate appreciable effect on agricultural output performance over time. Moreover, the results show that the effect of FDI shocks on human development index (HDI) was greater in the short‐ to medium‐term than in the long‐term. The threshold regression results suggest that higher levels of FDI inflow and HDI are needed for macroeconomic factors to produce significant positive effects on sectoral output performance. This study therefore provided some valuable recommendations to guide evidence‐based policy making in Africa to improve sectoral output and welfare.

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Modelling composition of growth, FDI and welfare in Africa: a SEM approach

Cited by 6 publications

References 52 publications

Unleashing technological advancements through foreign direct investments in West Africa's non-oil manufacturing sectors

Unleashing technological advancements through foreign direct investments in West Africa's non-oil manufacturing sectors

Does foreign direct investment matter for environmental innovation in African economies?

Foreign direct investment, sectoral output performance and poverty in Africa: Evidence from panel structural vector autoregressive and threshold regression models

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