Is foreign direct investment globalization-induced or a myth? A tale of Africa

Title
Is foreign direct investment globalization-induced or a myth? A tale of Africa
Publication Date
2023-07
Author(s)
Aluko, Olufemi Adewale
Chen, George S
( author )
OrcID: https://orcid.org/0000-0002-8519-9340
Email: gchen2@une.edu.au
UNE Id une-id:gchen2
Opoku, Eric Evans Osei
Type of document
Journal Article
Language
en
Entity Type
Publication
Publisher
John Wiley & Sons Ltd
Place of publication
United Kingdom
Edition
2651
DOI
10.1002/ijfe.2555
UNE publication id
une:1959.11/31346
Abstract

Foreign direct investment (FDI) provides many African countries an important source of capital inflow. Despite notable improvements in these capital-scarce countries' economic, political and social conditions, foreign investors have not considered them viable host locations. Since FDI brings enormous spillovers to its host, some countries have recently institutionalized globalization as the catalyst for reversing the trend. Against this backdrop, we examine the FDI-globalization nexus across 47 African countries for the 1996–2016 period. Using the augmented mean group estimator, the results suggest that FDI in Africa is indeed globalization-induced. Moreover, we find this positive nexus to be driven by the economic dimension of globalization. Overall, we demonstrate the potential of globalization in stimulating an FDI boom in Africa.

Link
Citation
International Journal of Finance and Economics, v.28 (3), p. 2663
ISSN
1099-1158
1076-9307
Start page
2663

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