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This paper examines the effect of foreign direct investment (FDI) on CO2 emissions by using disaggregated emissions data; territorial-based and consumption-based emissions. FDI is measured in three ways; inflow, net inflow, and stock. Employing data over the period 1995–2014 and a number of estimators, the results indicate FDI (whether measured as inflow or net inflow) has negative impact on emissions (irrespective of the measurement). However, the impact is generally found to be greater for the territorial-based emissions. The results of the FDI flow variables largely support the pollution halo hypothesis. Thus, the results are supportive of the robust effect of FDI’s positive effect. Regarding the stock measure, the negative effect of FDI is only found for the territorial-based CO2 emissions. Since the territorial-based emissions capture emissions in the domestic economy only, it is not surprising that the plausible efficiency of FDI stock is found to reduce these emissions rather the consumption-based. FDI stock is now considered part of the local economy. The results of the paper are largely not parallel with previous studies that did not disaggregate CO2 emissions. This we believe is an indication that the measure of CO2 matters for the analyses of the FDI-emissions nexus.

The Balassa-Samuelson effect provides a theoretical explanation for the deviation of the real exchange rate (RER) from its purchasing power parity based on the heterogeneous productivity growth in ...

This study investigates the nexus between energy demand and foreign direct investment (FDI) in Africa, using the simultaneous system Generalized Method of Moments estimator and panel data that consists of 27 African countries over the period 2000–2014. Specifically, the study hypothesizes a non-linear relationship between energy demand and FDI, which imposes the assumption that conditions, such as the level of technology absorptive capacity, the level, and stage of development and adjustment cost are likely to be heterogeneous across cross-section and over time. Several empirical strategies, such as changing the structure of the model set-up, using different sample groupings and applying different estimators with different assumptions were employed to substantiate the robustness nature of the hypothesized relationship. The findings revealed a robust concave effect of FDI on energy consumption. This suggests that there are learning and imitation experiences associated with FDI, and these experiences produce dichotomous paths in terms of realizing the energy-saving benefits of FDI.

Earlier studies on the impact of Foreign Direct Investment (FDI) on economic growth have not been instructive largely on their failure to examine the sectoral transmission channels through which FD...

Foreign direct investment (FDI) provides many African countries an important source of capital inflow. Despite notable improvements in these capital-scarce countries' economic, political, and social conditions, foreign investors have not considered them viable host locations. Since FDI brings enormous spillovers to its host, some countries have recently institutionalized globalization as the catalyst for reversing the trend. Against this backdrop, we examine the FDI–globalization nexus across 47 African countries for the 1996–2016 period. Using the augmented mean group estimator, the results suggest that FDI in Africa is indeed globalization-induced. Moreover, we find this positive nexus to be driven by the economic dimension of globalization. Overall, we demonstrate the potential of globalization in stimulating an FDI boom in Africa.

Bhagwati hypothesis opines that the overall impact of foreign direct investment (FDI) on economic growth is conditioned on countries’ level of integration with the international market. We test this hypothesis for some selected countries in sub-Saharan Africa (SSA). Does this hypothesis hold given our sample evidence? Yes! No! Maybe! We explain why. By invoking the sample splitting and threshold estimation technique, we find that the two measures of openness (trade openness and exports) mediate the FDI-economic growth relationship in three countries and this is an indication of complete Bhagwati hypothesis in these countries. Also, we find that, given the measure of openness, four countries exhibit incomplete Bhagwati hypothesis. Finally, we find no support for the Bhagwati hypothesis for most countries. Based on these findings, we argue that the validity of the Bhagwati hypothesis may be contingent on both country characteristics and the indicator of openness.

In the 21st century, the Sino–Africa relations are characterized by increasing levels of trade and investment. Additionally, African governments consider China a vital stakeholder in their plans to transform their economies through technology. This study empirically examines whether China's exports of information and communication technology and high-technology goods and foreign direct investment outflows stimulate growth in Africa. The results demonstrate that China's engagement in trade could lead to a positive and negative shift of steady-state position of real gross domestic product and technological progress, respectively, in Africa. These results predict that China's engagement will contribute to economic growth in African countries through increasing capital per worker efficiency but cause stagnation in their technological progress. Finally, one of the choices that African countries could make as they create policies to increase their technological progress is discussed.

The issue of whether capital inflows promote domestic investment has been of major concern especially in developing countries considering their massive dependence on these inflows. To this end, we make a case for 25 sub-Saharan African countries, using foreign direct investment and external debt as proxies for capital inflows, and the pooled mean group estimator over the period 1981–2010. The results reveal that foreign direct investment positively impacts domestic investment, but external debt has a negative impact on domestic investment in the long run. This implies that increase in foreign direct investment and/or reduction in external debt will promote domestic investment in sub-Saharan Africa. Therefore measures have to be put in place to attract more foreign direct investment and reduce the inflow of external debt in the region.

In recent years, the major concern about the environment has been the emissions of greenhouse gases and the consequent impact on climate change. There is a huge interest among scholars in examining factors that contribute to environmental degradation. In this study, we examined the environmental impact of foreign direct investment and industrialization in 36 selected African countries using data for the period 1980–2014. We proxied the environment with a number of factors including carbon dioxide, nitrous oxide, methane, and total greenhouse gases emissions. Employing the Pooled Mean Group estimation technique, we found that the effect of industrialization on the environment is generally insignificant. However, the effect of foreign direct investment on the environment is found to be largely significant. Policy implications of these findings are discussed.

This paper examines the effect of foreign direct investment (FDI) on economic growth and determines how the regulatory regime of the countries affects the FDI-growth relationship for 22 sub-Saharan African countries for the period 1980–2011. Using General Methods of Moments (GMM) estimation technique, the findings of the study show that both FDI and regulations (total regulations, credit market regulations, business regulations and labor market regulations) do not have an independent significant effect, however, their interaction has a significant positive effect on economic growth. This implies that the growth effect of FDI is stimulated in the presence of effective and quality regulations. Therefore measures have to be put in place to strengthen regulations in sub-Saharan Africa in order to realize the benefits of FDI.

This paper investigates the long-run impact of foreign direct investment and trade openness on economic growth in Ghana (1970–2011) within the framework of the endogenous growth literature. Adopting the autoregressive distributed lag bounds testing approach to cointegration the results suggest that the interaction of foreign direct investment and exports has been crucial in fostering growth, thus validating the famous Bhagwati hypothesis. From a policy oriented point of view, the study recommends the channeling of foreign direct investment to export-oriented sectors and the promotion of export-led growth strategies in long-term development plans.

FDI flows to Africa have mainly emanated from OECD member countries and BRICS (Brazil, Russia, India, China and South Africa). With a special emphasis on these sources for the period 2001 to date, this chapter adopts a descriptive approach and sheds light on how FDI is impacting development in Africa. Though the OECD has historically and still remains the largest FDI origin to Africa, great progress has been made in recent years by the BRICS. Besides, the impact of BRICS’ FDI on development in Africa has been more substantial recently, relative to the OECD. Considering the importance of FDI to Africa, governments should develop policy frameworks, such as public private partnership with both private and foreign investors to maximize the benefits of FDI for development.