Open AccessForeign direct investment and policy framework: New Granger causality evidence from African countries
Author(s) -
Rafiu Adewale Aregbeshola
Publication year - 2014
Publication title -
suid-afrikaanse tydskrif vir ekonomiese en bestuurswetenskappe/south african journal of economic and management sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.277
H-Index - 17
eISSN - 2222-3436
pISSN - 1015-8812
DOI - 10.4102/sajems.v17i5.709
Subject(s) - foreign direct investment , developing country , economics , international economics , inflow , granger causality , macroeconomics , geography , economic growth , meteorology , econometrics
The strategic importance of foreign direct investment in the contemporary economies has been tremendous.While various countries (developed and developing economies) have benefitted from the direct and spillovereffects of FDI, which range from improved technology and knowledge diffusion through to individual andcorporate capability enhancement, FDI outflow remains largely channelled to the developed countries, andthe rapidly developing countries in Asia and South America. Evidence suggests that the developmentenhancingeffects of FDI are felt more highly in the developing economies, such as economies in Africa.However, FDI inflow to the developing economies has been very low. Using data generated from the AfricanDevelopment Indicators (ADI) between 1980 and 2008 in econometric estimations, this paper finds thatgovernment policies (especially fiscal and monetary policies) play significant roles in facilitating FDI inflow tothe African countries studied. The study thereby suggests an improved regulatory framework to make Africamore attractive to inflow of FDI