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Does Foreign Direct Investment Promote Exports? Evidence from African Countries
Author(s) -
Mijiyawa Abdoul G.
Publication year - 2017
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12465
Subject(s) - foreign direct investment , spillover effect , economics , international economics , currency , panel data , investment (military) , sample (material) , monetary economics , generalized method of moments , value (mathematics) , international trade , macroeconomics , econometrics , chemistry , chromatography , machine learning , politics , political science , law , computer science
This paper empirically examines the effect of foreign direct investment (FDI) inflows on exports in Africa. Using the system‐ generalised method of moments estimator for linear dynamic panel data on a sample of 53 African countries and five‐year periods from 1970 to 2009, the paper finds that higher FDI inflows are positively and significantly linked with higher exports of goods and services. A large part of the FDI effect is driven by its spillover effects on exports. The paper also finds the lagged value of exports, a competitive currency, as well as increases in domestic investment and physical infrastructure, to be factors stimulating African exports.

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