On the simultaneous openness hypothesis: FDI, trade and TFP dynamics in Sub-Saharan Africa

Simplice Asongu, Joseph Nnanna () and Paul Acha-Anyi
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Joseph Nnanna: The Development Bank of Nigeria

Journal of Economic Structures, 2020, vol. 9, issue 1, 1-27

Abstract: Abstract This study assesses the simultaneous openness hypothesis that trade modulates foreign direct investment (FDI) to induce positive net effects on total factor productivity (TFP) dynamics. Twenty-five countries in Sub-Saharan Africa and data for the period 1980 to 2014 are used. The empirical evidence is based on the Generalized Method of Moments. First, trade imports modulate FDI to overwhelmingly induce positive net effects on TFP, real TFP growth, welfare TFP and real welfare TFP. Second, with exceptions on TFP and welfare TFP where net effects are both positive and negative, trade exports modulate FDI to overwhelmingly induce positive net effects on real TFP growth and welfare real TFP. In summary, the tested hypothesis is valid for the most part. Policy implications are discussed.

Keywords: Productivity; Foreign investment; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: E23 F21 F30 L96 O55 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: On the Simultaneous Openness Hypothesis: FDI, Trade and TFP Dynamics in Sub-Saharan Africa (2020)
Working Paper: On the Simultaneous Openness Hypothesis: FDI, Trade and TFP Dynamics in Sub-Saharan Africa (2020)
Working Paper: On the Simultaneous Openness Hypothesis: FDI, Trade and TFP Dynamics in Sub-Saharan Africa (2020)
Working Paper: On the Simultaneous Openness Hypothesis: FDI, Trade and TFP Dynamics in Sub-Saharan Africa (2020)
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DOI: 10.1186/s40008-020-0189-4

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