The Threshold Foreign Direct Investment under Application of the Growth Identification and Facilitation Framework: case of Benin

Kokou Wotodjo Tozo

International Journal of Science and Business, 2018, vol. 2, issue 3, 480-490

Abstract: This paper aims to contribute to the first stage in applying the Growth Identification and Facilitation Framework (GIFF) of the New Structural Economics (NSE). The key point is to give additional proactive guidelines to developing governments in their effort to attract foreign direct investment (FDI) for enabling growth and structural transformation under GIFF application. To proceed, we explore the importance of an initial condition. We claim that FDI has direct effect on growth only if it reaches a certain share of a country’s GDP, it remains negative otherwise. We provide an empirical verification to our underlying hypothesis and find that FDI has positive impact on growth in Benin only if its share exceeds 2.062% of the country’s GDP. Our finding, therefore, gives Benin Government a more precise target on the amount of FDI in the beginning.

Keywords: FDI; GIFF; Threshold; sample split; bootstrapping; Cobb-Douglas; Benin (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:aif:journl:v:2:y:2018:i:3:p:480-490

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