Email this article 
Impact of Exports and Foreign Direct Investment on Gross Domestic Product in Sub-Sahara Africa
Abstract
ABSTRACT
Bhagwati developed a hypothesis that expected economic growth (EG) enhancing impact of exports (EXP) and foreign direct investment (FDI) interaction. This paper checks the validity of the Bhagwati hypothesis by examining the moderation and mediation effect of EXP in the relationship between FDI and Gross domestic product for Sub Sahara Africa countries (SSA) during 2018 period. To achieve the article purpose, normality test, robust regression, and causal analysis using bootstrapping procedure were performed using R programming environment. The correlation results revealed a strong correlation between FDI-EXP-GDP. The coefficient of the robust regression of the interaction term of EXP and FDI was found positive, and statistically significant. The result of the mediation analysis showed that indirect relationship of FDI was found positive and significant whereas direct relationship was not significant. The results are consistent with the previous studies, theory, and Bhagwati hypothesis. Theorical and practical implications were presented.
Keywords
Full Text:
PDFReferences
Andreas, A, Nüfer, Y. A. and Patrick, J. F. G. (2018). A robust bootstrap test for mediation analysis. Retrieved 20.11.2020 from https://econpapers.repec.org/paper/emseureri/109594.htm
Baron, R.M. and Kenny, D.A. (1986). The Moderator-Mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations. Journal of Personality and Social Psychology, 51(6), 1173-1182
Bhavish, J., Nitisha, C. & Sheereen, F. (2016). Foreign direct investment & economic growth in Sub-Saharan Africa: an empirical study. Theoretical Economics Letters, 6, 798-807.
Casson, R. F. & Farmer, L. (2014). Understanding and checking the assumptions of linear regression: a primer for medical researchers. Clinical and Experimental Ophthalmology,42, 590–596 doi: 10.1111/ceo.12358.
Daniel, S. & John, E. (2017). Effects of trade and FDI on economic growth in Africa: an empirical investigation. Transnational Corporations Review, 9 (2). Taylor & Francis Journals, 9(2), 66-87.
Diouf, M. & Hai, Y. L. (2017). The impact of Asian foreign direct investment, trade on Africa’s economic growth. International Journal of Innovation and Economics Development, 3 (1), 72-85.
Gandolofo, G. (2014). International trade theory and policy. Italia: Springer.
Ghasemi, A., Zahediasl, S. (2012). Normality tests for statistical analysis: a guide for non-statisticians. International Journal Endocrinol Metab.10(2), 486-489. DOI: 10.5812/ijem.3505.
Gouranga, G. D and Kyunggi, D. (2012). Intra-industry trade and development: revisiting theory, measurement and new evidences. Retrieved from https://mpra.ub.uni-muenchen.de/37260/1/MPRA_paper_37260.pdf
Hadi, N. U., Abdullah, N. and Sentosa, I. (2016). Making Sense of Mediating Analysis: A Marketing Perspective. Review of International Integrative Business & Economics Research, 5(2), 62-76.
Halizam, M. A, Ridzuan, A. R., Shaar, M. S., Rahman, N. H. A., and Razak, M. I. (2021). Revisiting the impact of foreign direct investment on Malaysia economic growth. International Journal of Academic Research in Business and Social Science,11(5), 814-826.
Jan, H., Evžen, K., Mathilde, M. (2010). Direct and indirect effects of FDI in emerging European markets: a survey and meta-analysis. Retrieved 19.11.2020 from https://halshs.archives-ouvertes.fr/halshs-00469544/document.
Julio, L. G.(2005). Comparative advantage, economic growth and free trade. Retrieved from http://www.scielo.br/pdf/rec/v9n2/v09n02a04.pdf
Keho, Y. (2017). The impact of trade openness on economic growth: the case of Côte d'Ivoire, Cogent Economics & Finance, ISSN 2332-2039, Taylor & Francis, Abingdon, 5 (1), 1-14. http://dx.doi.org/10.1080/23322039.2017.1332820.
Khun, S. (2018). The Impact of foreign direct investment on the economic growth in Cambodia: empirical evidence. International Journal of Innovation and Economic Development, 4(5), 31-38.
Kimberly, A. (2020). Comparative advantage theory and examples. Retrieved from https://www.thebalance.com/comparative-advantage-3305915
Kowalski, P. (2011). Comparative advantage and trade performance: policy implications. OECD Trade Policy Papers, 121, OECD Publishing. http://dx.doi.org/10.1787/5kg3vwb8g0hl-en
Lawrence, A. A., Emmanuel, K. M. & Eric, A. B. (2019). Trade openness, FDI and economic growth in sub-Saharan Africa: do institutions matter? Transnational Corporations Review, 11(1), 65-79, DOI: 10.1080/19186444.2019.1578156.
Mahembe, E. and Odhiambo, N. M. (2014). Foreign direct investment and economic growth: a theoretical framework. Journal of Governance and Regulation, 3(2), 63-70.
Mamingi, N. and Martin, K. (2018). Foreign direct investment and growth in developing countries: evidence from the countries of the Organization of Eastern Caribbean States. CEPAL Review, 124, Retrieved 20.11.2020 from https://repositorio.cepal.org/handle/11362/43952
Mona, H. (2015). Does foreign direct investment generate economic growth in Subsaharan Africa? Thesis. Södertörn University | Institution of Social sciences
Mukhtarov, S., Alalawneh, M. M., Ibadov, E., & Huseynli, A. (2019). The impact of foreign direct investment on exports in Jordan: An empirical analysis. Journal of International Studies, 12(3), 38-47. doi:10.14254/2071-8330.2019/12-3/4
Mulugeta, G. D. (2017). International trade and its trends. Retrieved from https://www.researchgate.net/publication/312212506_International_trade_theories_and_its_trends
Norimah, B. R., Dayang, A. A. M. & Emilda, H. (2016). The Effect of Foreign Direct Investment, Exports and Employment on Economic Growth Model. nternational Journal of Academic Research in Business and Social Sciences, 6(11), 361-376.
Pardo, A. and Román, M. (2013). Reflections on the Baron and Kenny model of statistical mediation. Anales de psicología 29 (2), 614-623. Retrieved https://www.redalyc.org/pdf/167/16726244036.pdf
Rakhmatullayeva, D., Kuliyev, I., Beisenbaiyev, Z., and Tabeyev, T. (2020). Assessment of the influence of FDI on the economic growth of the host country: evidence from Kazakhstan. E3S Web of Conferences 159, 06007 (2020). https://doi.org/10.1051/e3sconf/202015906007. Retrieved 20.11.2020 from https://www.diva-portal.org/smash/get/diva2:826463/FULLTEXT01.pdf
Saleh, S. Sokvibol, K. and Lu, Q. (2019). The gravity model of trade: a theoretical perspective. Review of innovation and competitiveness 5(1).
Satya, D. G. (2015). Comparative advantage and competitive advantage: an economics perspective and a synthesis. Athens Journal of Business and Economics,1 (1), 9-22.
Schober, P., Boer, C. and Schwarte, L. A. (2018). Correlation coefficients: appropriate use and interpretation. Special Article,126(5).
Selimi, N., Reçi, K., and Sadiku, L. (2016). The impact of foreign direct investment on the export performance: empirical evidence for Western Balkan Countries. ILIRIA International Review,6(1), 57-66.
Sudha, B. (2013). Foreign direct investment. International journal of scientific research,2(4), 175-177.
Sultan, Z. A. (2013). A causal relationship between FDI inflows and export: the case of India. Journal of Economics and Sustainable Development, 4(2).
Tamás, K. Fischer, M. M. (2014). The gravity model for international trade: specification and estimation issues in the prevalence of zero flows. Retrieved from https://www.researchgate.net/publication/314377439_The_gravity_model_for_international_trade_Specification_and_estimation_issues
Tingley, D., Yamamoto, T., Hirose, K., Keele, L. and Imai, K. (2014). Mediation: R Package for causal mediation analysis. Journal of Statistical Software 59 (5), 1-38.
Topi, T. (2011). Gross domestic product as a modern-day economic indicator. Retrieved from https://core.ac.uk/download/pdf/38047645.pdf
Tsatsaridis, T. (2017). The impact of foreign direct investments on economic growth in Sub-Saharan Africa. Retrieved 20.11.2020 from https://www.semanticscholar.org/paper/The-impact-of-foreign-direct-investments-on-growth-Tsatsaridis/5b886659dfb0b6c59b348d3def41d8c0ec3e438b
Ukwandu, D. (2015). David Ricardo’s theory of comparative advantage and its implication for development in Sub-Saharan Africa. African Journal of Public Affairs 8 (3), 17-34.
UNDP (2020). Sustainable development goals. Retrieved 19.11.2020 from https://www.undp.org/content/undp/en/home/sustainable-development goals.html.
United Nations (2017). Trade facilitation and paperless trade implementation. Retrieved https://www.unece.org/fileadmin/DAM/trade/Publications/ECE_TRADE_438E_UNECERegionalReport2017.pdf
United Nations Conference on Trade and Development (2021). World Investment Report 2021. Retrieved on https://unctad.org/system/files/official-document/wir2021_en.pdf
United Nations Conference on Trade and Development. (2016). Gender-based inequalities and trade performance. Retrieved from https://vi.unctad.org/tag/docs/vol1/vol1m3.pdf
World Bank. (2020). World Indicator. Retrieved 23.11.2020 from https://data.worldbank.org/indicator
DOI: https://doi.org/10.18860/mec-j.v5i2.10922
Refbacks
- There are currently no refbacks.
Copyright (c) 2021 MEC-J (Management and Economics Journal)
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Editorial Office:
Faculty of Economics,
State Islamic University of Maulana Malik Ibrahim Malang
Gajayana Street 50, Malang-East Java, Indonesia 65144
Phone (+62) 341 558881, Facsimile (+62) 341 558881
e-mail: mecjournal@uin-malang.ac.id
P-ISSN 2599-3402
E-ISSN 2598-9537
MEC-J is licensed under CC-BY-SA
© All rights reserved 2017.
MEC-J INDEXED IN:
Member of:
