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How are Economic Governance Institutions Moderating the Effect of Economic Complexity on Trade, FDI Inflow, Environmental Degradation, and Economic Growth in Africa?

Author

Listed:
  • Christian Agu

    (University of Nigeria)

  • Jonathan Emenike Ogbuabor

    (University of Nigeria)

  • Benjamin Udoka Onah

    (University of Nigeria)

Abstract

Available literature shows that the economic structure of countries can influence trade, foreign direct investment (FDI) inflow, environmental degradation, and economic growth across nations. However, this literature is scarce in Africa. Besides, economic governance institutions are important factors that may affect growth. Hence, this paper investigates how economic governance institutions are moderating the effect of economic complexity on trade, FDI inflow, environmental degradation, and economic growth in Africa from 2000 to 2020. Employing the system GMM and marginal effect techniques, our results show that: (i) economic governance institutions provide important channels through which economic complexity drives trade, FDI inflow, and economic growth in Africa; and (ii) governance institutions in Africa moderate the effect of economic complexity on the environment by stimulating economic activities that lead to higher carbon dioxide emissions as a byproduct of growth. Overall, we find evidence that improved governance institutions in Africa are capable of intensifying trade, attracting more FDI, and spurring economic growth. The study made some insightful policy recommendations based on these findings.

Suggested Citation

  • Christian Agu & Jonathan Emenike Ogbuabor & Benjamin Udoka Onah, 2025. "How are Economic Governance Institutions Moderating the Effect of Economic Complexity on Trade, FDI Inflow, Environmental Degradation, and Economic Growth in Africa?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(2), pages 9536-9567, June.
    • Handle: RePEc:spr:jknowl:v:16:y:2025:i:2:d:10.1007_s13132-024-02284-2
    DOI: 10.1007/s13132-024-02284-2
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    Keywords

    Economic governance institutions; Economic complexity; Trade; FDI inflow; Environmental degradation; Economic growth;
    All these keywords.

    JEL classification:

    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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