Foreign direct investment, dual gap model and economic development in sub-Saharan Africa
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Africa like other developing continents has the representation of limiting
gaps of foreign exchange, investment and human capital skills. Sustainable development
emphasizes that for the limits of both foreign exchange and savings to be
reduced, there is need for Foreign Direct Investment (FDI) to flow inclusive of,
foreign skills and technology diffusion for economic development. The objective of
the research is to determine how the gaps of foreign exchange, investment and
human capital skills has been reduced through the influx of foreign investment for
the African economies. Pooled panel data between 2000 and 2018 was utilized for
39 African countries, and analysed with the fixed effect regression model. The
results indicate that the influx of FDI has not brought about sufficient decline in the
gaps for the selected African economies. The study recommends that government
of developing countries need to select with care industries that foreign capital flows
into in order to ensure tangible effect on investment domestically as well as deter
crowding-out of capital. Furthermore, strategies on protection of domestic
Keywords
HG Finance