Repackaging FDI for Inclusive Growth: Nullifying Effects and Policy Relevant Thresholds of Governance

Foreign direct investment and inclusive green growth in Africa: Energy efficiency contingencies and thresholds

“…Consistent with previous studies (e.g., Haug & Ucal, 2019;Salahuddin et al, 2018;Beradovic, 2009), our results show evidence of the downside of cross-border capital and financial flows, which takes the form of high-income inequality and environmental degradation. This supports the observations by some studies (Ofori & Asongu, 2022, Bokpin, 2017Cornia & Martorano, 2012) that FDI inflow to Africa is mainly concentrated in capitalintensive extractive industries and services that generate limited durable employment opportunities for the population. Moreover, consistent with the PHH and Africa's weak environmental standards, the negative effect of FDI on IGG is not surprising (see, e.g., Inglesi-Lotz & Ajmi, 2021;Sarkodie et al, 2020;Sarkodie & Strezov, 2019).…”

“…Furthermore, the results in Column 2 show that regulatory quality has a positive and statistically significant effect on inclusive growth (i.e., 0.207). This result is in line with Ofori and Asongu (2022), who contend that in highly informal settings like Africa, the effectiveness of policymakers in formulating sound policies and regulations can promote economic freedom and shared income growth and distribution. Also, similar to Gyamfi et al (2013), we find that vulnerable employment is harmful to shared growth in Africa.…”

“…The results are based on Equation ( 21), where inclusive growth, generated via the Jolliffe (2002) approach, is used as the outcome variable. Consistent with Ofori and Asongu (2022), we provide evidence (Column 7) that FDI fosters inclusive growth in Africa. This result provides optimism regarding the achievement of Aspiration 1 of the African Union's Agenda 2063, especially as FDI inflows to Africa are projected to increase from 2022 (UNCTAD, 2021).…”

“…2 The main dependent variable in this study is IGG, and is generated following the dimensional reduction technique, principal component analysis. Following previous studies (see e.g., Ofori & Asongu, 2022;Tchamyou et al, 2019;Del Carpio et al, 2017;Jolliffe, 2002), we generate our IGG series using the dimensional reduction technique of principal component analysis (PCA). To show the importance of the energy efficiency-FDI linkage for socioeconomic and environmental sustainability (i.e., at the disaggregated level of IGG), we capture the former by inclusive growth and the latter by greenhouse gas emissions.…”

Bridging Africa’s Income Inequality Gap: How Relevant Is China’s Outward FDI to Africa?

“…Moreover, as Acemoglu and Robinson (2008) and Acemoglu et al (2004) point out, good governance is crucial for promoting social welfare and equitable income distribution. Political stability is also imperative for attracting, integrating and sustaining FDI into recipient economies (Huynh, 2021;Ivanyna & Salerno, 2021;Ofori & Asongu, 2022). Further, for FDI to reduce income inequality, governance effectiveness could also prove crucial for building a business-friendly climate for sustaining foreign investors and fostering social inclusion and redistribution (Acemoglu & Robinson, 2012).…”