Official Development Assistance and Foreign Direct Investment: An Empirical Investigation of Their Implications for Domestic Capital Formation in Africa

Zelealem Yiheyis () and Emmanuel Cleeve ()
Additional contact information
Zelealem Yiheyis: Department of Economics, Clark Atlanta University
Emmanuel Cleeve: Department of Economics, Manchester Metropolitan University

Annals of Economics and Finance, 2018, vol. 19, issue 2, 625-651

Abstract: This study assesses the relationship between official development assistance (ODA) and foreign direct investment (FDI) and the extent to which each influenced domestically financed capital formation (DFCF) in Africa. An empirical analysis using dynamic panel data estimation methods reveals that both FDI and ODA exerted independent and interactive effects on DFCF in the typical study country. We find that the effect of FDI on DFCF is generally negative, while that of ODA is positive. Whether ODA influenced FDI is observed to depend, in part, on whether the aid was committed to complementary or productive activities in the recipient countries.

Keywords: Africa; Domestic investment; Dynamic GMM; Foreign direct investment; Official development assistance (search for similar items in EconPapers)
JEL-codes: E22 F21 F35 F41 O55 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://down.aefweb.net/AefArticles/aef190211YiheyisCleeve.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2018:v:19:i:2:yiheyis:cleeve

Access Statistics for this article

Annals of Economics and Finance is currently edited by Heng-fu Zou

More articles in Annals of Economics and Finance from Society for AEF Contact information at EDIRC.
Bibliographic data for series maintained by Qiang Gao ().