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Global uncertainty, economic governance institutions and foreign direct investment inflow in Africa

Author

Listed:
  • Oliver E. Ogbonna

    (University of Nigeria)

  • Jonathan E. Ogbuabor

    (University of Nigeria)

  • Charles O. Manasseh

    (University of Nigeria)

  • Davidmac O. Ekeocha

    (University of Nigeria)

Abstract

Based on the fact that Africa has not fared well in attracting foreign direct investments in the last decade compared to other regions of the world, especially during periods of high uncertainty occasioned by one crisis or the other, this study investigated: the impacts of global uncertainty and economic governance institutions on FDI inflow to Africa; the moderating effect of economic governance institutions on global uncertainty-FDI relationship in Africa; and other significant drivers of FDI inflow to Africa. The study used the system GMM modeling framework and a panel of 46 African economies over the period 2010–2019. The results indicate that global uncertainty has a significant dampening effect on FDI inflow to Africa, and economic governance institutions on the continent amplify this effect rather than mitigate it. The results further indicate that natural resource endowment, market size, and initial FDI inflows are robust drivers of FDI inflows to Africa, while the roles of financial development and trade openness remained muted. Overall, the study concludes that policymakers in Africa should take urgent steps to strengthen the quality of economic governance institutions as a means of mitigating the excruciating effect of global uncertainty on FDI inflows to Africa.

Suggested Citation

  • Oliver E. Ogbonna & Jonathan E. Ogbuabor & Charles O. Manasseh & Davidmac O. Ekeocha, 2022. "Global uncertainty, economic governance institutions and foreign direct investment inflow in Africa," Economic Change and Restructuring, Springer, vol. 55(4), pages 2111-2136, November.
    • Handle: RePEc:kap:ecopln:v:55:y:2022:i:4:d:10.1007_s10644-021-09378-w
    DOI: 10.1007/s10644-021-09378-w
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    Cited by:

    1. Manasseh Charles O. & Nwakoby Ifeoma C. & Okanya Ogochukwu C. & Ifediora Chuka U. & Nzidee Williams A., 2023. "The Impact of Foreign Direct Investment and Oil Revenue on Economic Growth in Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 33(3), pages 61-85, September.
    2. Thanh Quang Phung & Ehsan Rasoulinezhad & Hang Luong Thi Thu, 2023. "How are FDI and green recovery related in Southeast Asian economies?," Economic Change and Restructuring, Springer, vol. 56(6), pages 3735-3755, December.
    3. Davidmac O. Ekeocha & Jonathan E. Ogbuabor & Oliver E. Ogbonna & Anthony Orji, 2023. "Economic policy uncertainty, governance institutions and economic performance in Africa: are there regional differences?," Economic Change and Restructuring, Springer, vol. 56(3), pages 1367-1431, June.
    4. Toyo Amègnonna Marcel Dossou, 2023. "Income Inequality in Africa: Exploring the Interaction Between Urbanization and Governance Quality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 167(1), pages 421-450, June.
    5. Kishwar Ali & Hu Hongbing & Chee Yoong Liew & Du Jianguo, 2023. "Governance perspective and the effect of economic policy uncertainty on financial stability: evidence from developed and developing economies," Economic Change and Restructuring, Springer, vol. 56(3), pages 1971-2002, June.

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    More about this item

    Keywords

    Global uncertainty; Economic governance institutions; Foreign direct investment; System GMM; Africa;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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