The long and short run effects of foreign direct investment on economic complexity in Sub-Saharan African countries

Jasnine Mogem Kouam (), Luc Nembot Ndeffo () and Mathurin Aimé Mekam Pouatcha ()
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Jasnine Mogem Kouam: University of Dschang
Luc Nembot Ndeffo: University of Dschang
Mathurin Aimé Mekam Pouatcha: University of Bamenda

Economics Bulletin, 2023, vol. 43, issue 3, 1421 - 1433

Abstract: This study examines the long and short run effects of foreign direct investment (FDI) on economic complexity using a sample of 21 Sub-Saharan African (SSA) countries over the period 1980-2017. The empirical evidence is based on the pooled mean group methodology. Results reveal a mixed impact of FDI on economic complexity. In particular, we found that FDI stimulates economic complexity in the long run whilst a negative relationship is observed in the short run. Remittances, corruption, health and GDP are found to be determinants of economic complexity. Furthermore, robustness checks show that regardless of the level of income our results are confirmed. Finally, our findings were robust when using the System Generalized Method of Moments (SGMM) as an alternative estimator.

Keywords: Economic complexity; Foreign Direct investment; Sub-Saharan Africa; Pooled mean group; System Generalized Method of Moments. (search for similar items in EconPapers)
JEL-codes: F4 O1 (search for similar items in EconPapers)
Date: 2023-09-30
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