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Financial Development, Foreign Direct Investment, Exchange Rate Regimes, and Economic Growth: New Evidence from African Economies

Author

Listed:
  • Martín Grandes
  • Dossina Yeo

    (Observatorio de Innovación Social, Facultad de Ciencias Económicas, Universidad de Buenos Aires, Argentina Consejo Nacional de Investigaciones Científicas y Técnicas de Argentina (CONICET), Argentina
    International School of Managment, Francia)

Abstract

This paper examines empirically the extent to which financial development, Foreign Direct Investment (FDI) and exchange rate regime (ERR) altogether positively influence economic growth in Africa. To achieve this, we build two baseline panel data samples of African countries and new expanded datasets spanning 1980-2015 using a small sample adjusted Generalized Method of Moments (GMM) estimator. To check the robustness of our results, we built two other panel samples by adding on the two previous panel data samples, data from emerging and developed countries, and repeating the analysis. The results from the estimations suggest that financial development, FDI influence positively and significantly economic growth, whereas exchange rate regime has no significant effect on economic performance, controlling for the usual growth- regression variables like trade openness, human capital, investment, governance, and the lagged value of per capita GDP.

Suggested Citation

  • Martín Grandes & Dossina Yeo, 2023. "Financial Development, Foreign Direct Investment, Exchange Rate Regimes, and Economic Growth: New Evidence from African Economies," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 69, pages 1-29, January-D.
    • Handle: RePEc:lap:journl:639
    DOI: https://doi.org/10.24215/18521649e029
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    More about this item

    Keywords

    desarrollo financiero; inversión extranjera directa; crecimiento económico; África; regímenes cambiarios.;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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