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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. [ABSTRACT FROM AUTHOR]

This article examines the developer's dilemma—a seeming quandary emerging from the fact that developing countries simultaneously pursue two different developmental goals: (a) seeking economic development through structural transformation and (b) reducing income inequality. However, the proclivity of increasing income inequality while pursuing structural transformation is often referred to as the developer's dilemma. This study investigates for the presence of this dilemma in Africa using sample splitting and threshold estimation technique. While we find support for the existence of a developer's dilemma, suggesting that structural transformation induces income inequality, the income inequality‐widening effect is disproportionate. [ABSTRACT FROM AUTHOR]

We pioneer empirical investigation into the causal relationship between foreign direct investment (FDI) and globalization in Africa with the aid of the Dumitresu-Hurlin panel Granger causality test. Using a panel dataset of 50 countries for the period 1996–2016, we find evidence of unidirectional causality from globalization to FDI. Considering the dimensions of globalization, we find evidence of unidirectional causality from social and political globalization to FDI while, in the case of economic globalization, the direction of causality moves from FDI. However, at the country level, there are substantial variations in terms of the causal relations. Thus, making policies regarding FDI–globalization should be treated with caution as one–size–does–not–fit all given the differential causal nexuses in Africa. [ABSTRACT FROM AUTHOR]

In this paper, we test for causality between imports and economic growth in 41 African countries. We differ from earlier studies by testing for causality at high and low frequency levels, that is, in the short and long run, respectively. In doing so, we employ a frequency domain Granger causality test robust to pretest biases relating to unit root and cointegration tests. We document that there is: (i) unidirectional causality running from imports and economic growth in 7 countries in the short run and 5 countries in the long run, (ii) unidirectional causality running from economic growth to imports in 4 countries in the short run and 10 countries in the long run, (iii) bidirectional causality in only one country in the short run and 3 countries in the long run, and (iv) no causality in 29 countries in the short run and 23 countries in the long run. Our findings suggest that, for the most part, the neutrality hypothesis is valid in the short- and long-run periods. We imply from our findings that possible changes in the causality dynamics between imports and economic growth over time should be taken into consideration before designing policies. [ABSTRACT FROM AUTHOR]

The interaction of foreign aid and foreign direct investment is an important issue for developing countries in Africa. I probe into the mediating role of institutional quality and financial development using a panel data set of 47 countries over the period 1996–2016. I find that the effectiveness of foreign aid in attracting foreign direct investment is greater in countries with better institutional quality and sound financial development. The implications for policy are outlined. [ABSTRACT FROM AUTHOR]