Foreign direct investment and economic growth in Sub-Saharan Africa: the complementary role of economic freedom and financial market fragility. Issue 2 (3rd April 2022)

• Record Type: Journal Article
• Authors: Kwablah, Edmund; Amoah, Anthony
• Is Part Of: Transnational corporations review. Volume 14:Issue 2(2022)
• Page Start: 127
• Page End: 139
• Publication Date: 2022-04-03
• Subjects: FDI -- economic growth -- financial market fragility -- economic freedom -- SSA; 338.88
• DOI: 10.1080/19186444.2022.2041159
• Languages: English
• ISSNs: 1918-6444

Abstract

Abstract: In line with the neoclassical growth theory, this study examines the complementary role of economic freedom and financial fragility in the foreign direct investment (FDI) – growth nexus for 36 Sub-Saharan (SSA) Africa countries spanning the period 1998 to 2016. The study hypothesises that for FDI to translate into growth, financial market development that account for fragility and economic freedom should be present in the host country. The uniqueness of this study lies in the use of financial market data that accounts for financial market fragility and aggregate score of economic freedom. Using fully modified ordinary least squares technique, the study reveals that economic freedom and a well-developed financial market complement FDI in promoting economic growth in SSA. This study highlights the need to strengthen the financial system and promote economic freedom to enhance FDI's effect on economic growth.