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

Hongliang Zhang (), Betul Arda (), Yuechan Lu () and Senlin Miao ()
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Hongliang Zhang: Department of Accounting, Beijing Technology and Business University
Betul Arda: College of Management, University of Massachusetts Boston
Yuechan Lu: College of Management, University of Massachusetts Boston
Senlin Miao: School of Economics, Anhui University

Annals of Economics and Finance, 2018, vol. 19, issue 2, 653-681

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: Stock; Liquidity; and; Price; Crash; Risk:; Evidence; from; a; Kernel; Matching; Approach (search for similar items in EconPapers)
JEL-codes: E22 F21 F35 F41 O55 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2018:v:19:i:2:zhang:arda:lu:miao

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