Human capital threshold, foreign direct investment and economic growth: evidence from sub-Saharan Africa

Anetor, Friday Osemenshan

doi:10.1108/ijdi-01-2020-0014

Cited by 17 publications

(12 citation statements)

References 39 publications

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“…The first model aims to discern the partial effects of foreign aid (ODA) and HCD on economic growth, while the second model captures the growth effect of the interaction between foreign aid and HCD. The model specification of this study improves on the earlier econometric model estimated by Anetor (2020), which ignored the role of foreign aid, and its interaction with HCD in pursuit of economic growth:…”

Section: Model Specificationmentioning

confidence: 99%

“…The study extended the Solow growth model to include foreign aid and human capital. Consider the Cobb-Douglas production function of an economy as developed in Anetor (2020) with appropriate adaptation to suit foreign aid:…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…The extended theory assumes that foreign aid promotes economic growth by technology transfer and the positive externality effects of the superior technology entrenched in foreign aid. The channel through which the technology associated with foreign aid influences aggregate productivity is through its effects on the average productivity of firms in the host economies (Anetor, 2020). The size of the effect of the spillover effect on the aggregate economy depends mainly on the absorptive capacity of the recipient economy, which is measured by the stock of human capital.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…Also, because the study covered more cross-sectional dimensions than timeseries dimensions (N > T), the SGMM results in exhibit consistency. Further, the SGMM corrects heterogeneity amongst countries due to disturbances, addresses revere causality, accounts for omitted variable bias, corrects measurement error and endogeneity problems associated with growth models (Anetor, 2020;Teixeira and Queir os, 2016).…”

Section: Human Capital Interactionmentioning

confidence: 99%

“…The result indicates that the current stock of human capital in South Asia and Africa does not stimulate economic growth. Some of the rationales for this result are the high rate of adult illiteracy and brain drain (Anetor, 2020) in these regions. This result agrees with some extant studies (Abubakar et al, 2020;Mehrara and Musai, 2013;Omankhanlen et al, 2014;Orisadare et al, 2018;Tsaurai, 2017).…”

Section: Human Capital Interactionmentioning

confidence: 99%

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Human capital interaction on foreign aid-growth nexus: evidence from South Asia and sub-Saharan Africa

Nwani

2021

IJDI

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Purpose The purpose of this study is to examine the interactive role of human capital development (HCD) in foreign aid-growth relations in South Asia and sub-Saharan Africa countries from 1985–2019. Design/methodology/approach The study used panel data that cut across all countries in South Asia and sub-Saharan Africa collected from The World Bank’s Development Indicators. The data were analysed using Bai and Ng panel unit root idiosyncratic cross-sectional tests and the system generalised method of moments (SGMM). Findings The study found that foreign aid and HCD have negative impacts on economic growth. Fortunately, the interaction of human capital with foreign aid reduces the extent to which foreign aid impedes economic growth. The presumption is that South Asia and sub-Saharan Africa economies had not reaped the potential growth effect of foreign aid inflows due to high illiteracy rates and weak social capacities. The peculiarity of these regions hinders the absorptive capacity to transform positive externality associated with foreign aid into sizeable economic prosperity. Practical implications It is imperative for South Asia and sub-Saharan Africa countries to not depend on foreign aid; instead, the strategic action by policymakers should be to developing sustainable social capacities with HCD as the centre-piece. Originality/value The highpoint of this study is its inter-regional approach and the interplay between human capital and foreign aid using the second generation panel unit root estimator and the SGMM approaches.

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Section: Model Specificationmentioning

confidence: 99%

Section: Theoretical Frameworkmentioning

confidence: 99%

Section: Theoretical Frameworkmentioning

confidence: 99%

Section: Human Capital Interactionmentioning

confidence: 99%

Section: Human Capital Interactionmentioning

confidence: 99%

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Human capital interaction on foreign aid-growth nexus: evidence from South Asia and sub-Saharan Africa

Nwani

2021

IJDI

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Foreign financial flows, human capital and economic growth in African developing countries

Nguyen

2020

Int. J Fin Econ

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This study investigates the relationship between foreign financial flows (i.e., FDI inflows, ODA, and remittances), human capital, and economic growth in African developing countries. Along with the two‐step system GMM estimator, fixed effect panel quantile regression is applied as a robustness check for the sample of 38 African countries over the period 2002–2017. First, FDI inflows emerge with different impacts on economic growth, depending on the level: negative and positive effects at low and high levels, respectively. Interestingly, these effects are moderated by the human capital of hosting countries. Second, ODA and remittances are found as negative factors for economic growth; notably, higher human capital accumulation of receiving countries reduces these negative impacts. Overall, the results imply that foreign financial flows are correlated differently with human capital in influencing economic growth among African countries. Nevertheless, the significant implications are that more attention must be paid to human capital in these countries, and more feasible policies are urgently needed for better absorption of external capital flows.

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Achieving sustainable development in Sub‐Saharan Africa: Do human capital and foreign direct investment matter?

Onatunji

2024

Manage Decis Econ

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Over the past few decades, there has been a noticeable development of interest among scholars and policymakers worldwide regarding the prominent drivers of sustainable development. The role of human capital and foreign direct investment (FDI) in fostering sustainable development, however, has been largely neglected by policymakers and scholars, despite recent emphasis on FDI amidst current economic performance worldwide, particularly in developing countries. This study empirically investigates the effect of human capital and FDI on sustainable development in sub‐Saharan Africa (SSA) spanning 1991–2021. The empirical analysis was implemented by deploying different techniques, such as feasible generalized least squares, panel corrected standard errors, and Lewbel two‐stage least square techniques, with the panel quantile regression approach as a robustness check. The empirical outcomes show that improvement in human capital via educational attainment fosters economic expansion, employment opportunities, and poverty reduction, whereas an increase in health human capital undermines sustainable development in SSA. The findings also reveal that increasing FDI flows to priority sectors in the region are critical for enhancing human capital, thus stimulating economic performance, job opportunities, and poverty alleviation in SSA. This study puts forward important policy implications for achieving sustainable development.

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Human capital threshold, foreign direct investment and economic growth: evidence from sub-Saharan Africa

Cited by 17 publications

References 39 publications

Human capital interaction on foreign aid-growth nexus: evidence from South Asia and sub-Saharan Africa

Human capital interaction on foreign aid-growth nexus: evidence from South Asia and sub-Saharan Africa

Foreign financial flows, human capital and economic growth in African developing countries

Achieving sustainable development in Sub‐Saharan Africa: Do human capital and foreign direct investment matter?

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