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The impact of foreign investment in financing sustainable development in Sub‑Saharan African countries

Author

Listed:
  • Tijani Forgor Alhassan

    (Moscow Polytechnic University, Moscow, Russia)

  • Eugenia Owusu Ansah

    (HSE University, Moscow, Russia)

  • Shakizada U. Niyazbekova

    (Financial University under the Government of the Russian Federation, Moscow, Russia)

  • Tatiana K. Blokhina

    (Lomonosov Moscow State University, Moscow, Russia)

Abstract

This study outlines the features of financing investment development in Sub-Saharan African countries. Using the financial determinants of GDP, a model was developed based on the method of least squares employing data covering 2004–2018. It was revealed that a positive correlation exists between economic growth and bank loans as well as official development assistance. The results of the model indicate that bank loans and remittances significantly increase economic growth. However, both foreign direct investment and official development assistance (ODA) were found to be ineffective in promoting development, and this is attributable to its investment model (resource-seeking) and the conditions under ODA financing, respectively, in the region. Bank loans were found to be the most influential in promoting sustainable growth in the region. Hence, it is instructive that the reforms are needed and incentives are to be developed to improve the level of the region's financial and banking sector development and facilitate the sustainable socioeconomic development of these economies.

Suggested Citation

  • Tijani Forgor Alhassan & Eugenia Owusu Ansah & Shakizada U. Niyazbekova & Tatiana K. Blokhina, 2024. "The impact of foreign investment in financing sustainable development in Sub‑Saharan African countries," Russian Journal of Economics, ARPHA Platform, vol. 10(1), pages 60-83, March.
    • Handle: RePEc:arh:jrujec:v:10:y:2024:i:1:p:60-83
    DOI: 10.32609/j.ruje.10.105745
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    References listed on IDEAS

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    1. Daniel Agyapong, 2014. "Stock Market Integration in West African Monetary Zone: A Linear and Nonlinear Cointegration Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(5), pages 563-587, May.
    2. Daniel Agyapong, 2014. "Stock Market Integration in West African Monetary Zone: A Linear and Nonlinear Cointegration Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(5), pages 563-587.
    3. Sandrina Berthault Moreira, 2005. "Evaluating The Impact Of Foreign Aid On Economic Growth: A Cross-Country Study," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(2), pages 25-48, December.
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    More about this item

    Keywords

    Sub-Saharan Africa funding investment foreign direct investment special economic zones grants foreign capital flow domestic resources investment development.;

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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