Structural and Institutional Determinants of Investment Activity in Africa

Chuku Chuku, Kenneth Onye () and Hycent Ajah ()
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Kenneth Onye: University of Uyo
Hycent Ajah: University of Uyo

A chapter in Investment and Competitiveness in Africa, 2017, pp 25-50 from Springer

Abstract: Abstract This paper considers the structural and institutional determinants of investment activity in selected African countries within a neoclassical growth framework. Non-parametric regression techniques, generalized method of moments and a family of panel data estimation techniques are utilized to uncover the intricacies of the relationship. Four main findings emerge; (i) financial openness and institutional quality are the most robust structural and institutional determinants of investment activity respectively, (ii) there is evidence of nonlinearity in the relationship and there exist a threshold level of financial openness that achieves the highest level of investment, (iii) the inhibiting effect of financial openness beyond the threshold is potentially mitigated by higher levels of institutional quality, (iv) promoting institutional quality is an effective strategy for facilitating investment activity in Africa.

Keywords: Investments; Financial openness; Institutional quality; Nonparametric regression; GMM (search for similar items in EconPapers)
JEL-codes: E22 O16 O38 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Structural and institutional determinants of investment activity in Africa (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:spr:aaechp:978-3-319-44787-2_2

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DOI: 10.1007/978-3-319-44787-2_2

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