Exchange Rate Regimes and Foreign Direct Investment Flow in West African Monetary Zone (WAMZ)

Perekunah Eregha

International Economic Journal, 2020, vol. 34, issue 1, 85-99

Abstract: This study examines the effect of exchange rate regimes on foreign direct investment (FDI) flow for West African Monetary Zone (WAMZ). The Arellano Panel Correction for Serial Correlation and Heteroskedaticity option of the Within Estimator for fixed-effect panel data model as well as the Dynamic Panel Data Instrumental Variable Approach by Anderson and Hsiao [(1981). Estimation of dynamic models with error components. Journal of the American Statistical Association, 76, 598–606] for the countries selected based on the data availability for the period 1980–2016 were used. The fixed exchange rate regime was found to hamper FDI flow in the zone, while intermediate policy had a significantly positive effect in facilitating FDI flow during periods of declining foreign reserves and narrowing current account balance in WAMZ. This implies that the transmission of the effect of exchange rate regimes on FDI inflows depends on the positions of the foreign reserves and current account balance in the zone. The study therefore recommends the need for monetary authorities to be cautious in managing their exchange rates especially in periods of depleting foreign reserves and narrowing current account so as not to deter the much needed FDI inflow.

Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10168737.2019.1669689 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Exchange Rate Regimes and Foreign Direct Investment Flow in West African Monetary Zone (WAMZ) (2019)
Working Paper: Exchange Rate Regimes and Foreign Direct Investment Flow in West African Monetary Zone (WAMZ) (2019)
Working Paper: Exchange Rate Regimes and Foreign Direct Investment Flow in West African Monetary Zone (WAMZ) (2019)
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:taf:intecj:v:34:y:2020:i:1:p:85-99

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RIEJ20

DOI: 10.1080/10168737.2019.1669689

Access Statistics for this article

International Economic Journal is currently edited by Jaymin Lee Editor

More articles in International Economic Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().