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Article
Publication date: 5 June 2017

Isaac Doku, John Akuma and John Owusu-Afriyie

This study aims to examine the quantitative effect and direction of Chinese Foreign Direct Investment (FDI) on economic growth in Africa using a sample of 20 African…

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Abstract

Purpose

This study aims to examine the quantitative effect and direction of Chinese Foreign Direct Investment (FDI) on economic growth in Africa using a sample of 20 African countries from 2003 to 2012 with data obtained from United Nations Conference on Trade and Development and the World Bank.

Design/methodology/approach

The study used panel least squares regression, specifically fixed effect model to examine the quantitative effect of Chinese FDI on economic growth in Africa. The study also used Granger causality test to examine whether a causal relationship exists between economic growth and China’s FDI in Africa.

Findings

The study finds that a 1 per cent increase in China’s FDI stock in Africa significantly increases Africa’s gross domestic product (GDP) growth by 0.607 per cent, all things being equal. Furthermore, the study finds that a causal link exists between GDP growth in Africa and China’s FDI and the nature of causality is unidirectional.

Practical implications

The study recommends that to stimulate Chinese FDI in Africa, free visas must be given to Chinese investors coming into the continent, low tariffs should be imposed on inputs and intermediate goods from China and grant of business operation permit to Chinese investors must be made less bureaucratic.

Originality/value

This research has not been presented to any journal for publication and is originally written by the authors.

Details

Journal of Chinese Economic and Foreign Trade Studies, vol. 10 no. 2
Type: Research Article
ISSN: 1754-4408

Keywords

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Article
Publication date: 2 July 2020

Kofi Kamasa, Isaac Mochiah, Andrews Kingsley Doku and Priscilla Forson

This paper aims to empirically investigate the impact that financial sector reforms have on foreign direct investment (FDI) in Ghana.

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1408

Abstract

Purpose

This paper aims to empirically investigate the impact that financial sector reforms have on foreign direct investment (FDI) in Ghana.

Design/methodology/approach

Composite financial sector reform index was constructed, which was made up of various forms of reform policies that were implemented from 1987 to 2016. The auto regressive distributed lag bounds test was used to establish cointegration between variables. Having controlled for other covariates that affect FDI such as trade openness, exchange rate, gross domestic product per capita, inflation and by using the fully modified ordinary least squares method, the estimations are robust as it uses a semi-parametric correction to avoid for any possible issues of endogeneity and serial correlation.

Findings

Results from the paper reveal that financial sector reform deepening boost FDI with a 2.167% increase in FDI following from a unit percentage improvement of the financial sector reforms. Considering the various categories of reforms, the results reveal that competitive reforms have the highest impact on FDI followed by privatization reforms with positive and significant elasticity coefficients of 2.174% and 0.726%, respectively. Behavioral reforms revealed a positive effect on FDI, albeit insignificant.

Originality/value

The paper contributes to policy by providing empirical evidence on the effect of financial sector reform on FDI inflows in Ghana. As far as the review of literature is concerned, this paper provides the foremost empirical evidence on the subject with sole emphasis on Ghana. Thus, this paper suggests the deepening of the financial sector reforms, improving competition and maintaining macroeconomic stability.

Details

Journal of Humanities and Applied Social Sciences, vol. 2 no. 4
Type: Research Article
ISSN:

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