Physical Infrastructures and Attractiveness of Private Capital in Sub-Saharan African (SSA) Countries

Elie NGONGAN

Abstract


Physical infrastructures are a set of interconnected structural elements whose function is to participate in attracting capital flows in order for the economy to function efficiently. They transfer capital flows that are able to ensure growth and stability. They also constitute a major challenge for growth and development. We have attempted in this paper to study the influence of physical infrastructures and financial development on foreign direct investments (FDIs) in the context of Sub-Saharan African (SSA) countries by combining two theoretical approaches (the Paradox of Lucas and the external-internal factors), and by integrating the correlation between the components of capital flows. Our regressions show the importance of non-linear effects in the explanation of the determinants of private capital. This analysis also emphasizes the more important role physical infrastructures play in attracting FDIs despite perverse effects.

Full Text:


References


Alfaro, L., Kalemli-Ozcan, S. and Vadym, V. (2003). Why doesn’t Capital Flow from Rich to Poor Countries, (Forthcoming) Review of Economics and Statistics.

Alfaro, L., Kalemli-Ozcan, S. Vadym, V. (2005). Capital Flows in a Globalized World: The Role of Policies and Institutions, NBER Working Paper No. 11696.

Aschauer, D.A. (1989) Does Public Capital Crowd out Private Capital?, Journal of Monetary Economics, 24(2), 171-188.

Asiedu, E. (2002). On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?, World Development, 30(1), 107-139.

Asiedu, E. (2006). Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability. The World Economy, 29(1), 63-77.

Asiedu, E. & Gyimah-Brempong, K. (2007). Effect of the Liberalization of Investment Policies on Employment and Investment of Multinational Corporations in Africa, WIDER Working Paper, no. 69.

Bénassy-Quéré, A. & Fontagné, L. (2001). Exchange-rate Strategies in the Competition for Attracting Foreign Direct Investment”, Journal of the Japanese and International Economies, 51(2), 178-198.

Bénassy-Quéré, A., Coupet, M., & Mayer, T. (2007). Institutional Determinants of Foreign Direct Investment, World Economy, 30(2), 764-82.

Calderón, C., & Servén, L. (2004). Trends in Infrastructure in Latin America, 1980-2001, World Bank Research Paper, no 269. dialnet.unirioja.es.

Calvo, G., Leiderman, L., & Reinhart, C. (1996). Inflows of Capital to Developing Countries in the 1990’s, Journal of Economic Perspectives, 10(2), 123-139.

Coval, J. D. & Moskowitz J. (2001). The Geography of Investment: Informed Trading and Asset Prices, Journal of Political Economy, 109 (4), 811-541.

Dupuch, S. (2001). Les déterminants des flux d'IDE intra-européens, Centre d'Économie de Paris-Nord (CEPN) CNRS-UMR - univ-paris13.fr

Escribano, A. & Guasch, J. L. (2005). Assessing the Impact of the Investment Climate on Productivity Using Firm-Level Data: Methodology and the Cases of Guatemala, Honduras, and Nicaragua, World Bank Policy Research Working Paper No. 3621

Ferrucci, G., Herzberg, V., Soussa, F., & Taylor, A. (2004). Understanding Capital Flows to Emerging Market Economies, Financial Stability Review, 16, 89-97.

Garcia-Mila, T., McGuire, T. J., & Porter, R. H. (1996). The Effect of Public Capital in State-level Production Functions Reconsidered, The Review of Economics and Statistics, 7(1), 2-16.

Gastanaga, V., Nugent, J.B., & Pashamova, B. (1998). Host Country Reforms and FDI Inflows: How Much Difference Do They Make?, World Development , 26(7), 1299-1314.

Gramlich, E. M. (1994). Infrastructure Investment: a Review Essay, Journal of Economic Literature, 32(3), 1176-1196.

Haussmann, R. & Fernandez-Arias, E. (2000). Foreign Direct Investment: Good Cholesterol, Inter-American Development Bank Working Paper, no. 417.

Jenkins, C. & Thomas, L. (2002). Foreign Direct Investment in Southern Africa: Determinants, Characteristics and Implications for Economic Growth and Poverty Alleviation”, sarpn.org

Kandiero, T. & Chitiga, M. (2003). Trade openness and Foreign Direct Investment in Africa: Economics, South African Journal of Economic and Management Sciences, 9(3), 355-370.

Kim, Y. (2000). Causes of Capital Flows in Development Countries, Journal of International Money and Finance, 19(2), 235-253.

Kinda, T. (2008). Infrastructure et flux de capitaux privés vers les pays en développement, Revue économique, 59(3), 537-549.

Kumar, N. (2002). Infrastructure Availability, Foreign Direct Investment Inflows and their Export-orientation: A Cross-country Exploration, RIS Discussion Paper No. 26.

Levine, R. (1997). Financial Development and Economic Growth: Views and Agenda, Journal of Economic Literature, 35(2), 688-726.

Levine, R. (2005). Finance and Growth: Theory and Evidence, Handbook of Economic Growth, 1(part A), 865-934.

Loree, D. W. & Guisinger, S. E. (1995). Policy and Non-Policy Determinants of U.S Equity Foreign Direct Investment, Journal of International Business Studies, 26(2), 281-298.

Lucas, R.E. (1990). Why Doesn’t Capital Flow from Rich to Poor Countries?, American Economic Review, 80(2), 92-96.

Maleck, R. (2014). Lean Principals Application in Public-Private Partnership Project Procurement, etd. Ohiolink.edu, May 2014.

Montiel, P. J. (2006) Obstacles to Investments in Africa: Explaining the Lucas Paradox”, Presented at the high-level seminar Realizing, The Potential for Profitable Investment in Africa.

Ngowi, H.P. (2001). Can Africa Increase Its Global Share of Foreign Direct Investment (FDI), West Africa Review, 2(2), 1-22.

Nunnenkamp, P. (2002). Determinants of FDI in Developing Countries: has Globalization Changed the Rules of the Game?, Working Paper, Kieler Arbeitspapiere, No. 1122-econstor.eu

OCDE (2002), “L’investissement direct étranger au service du développement: optimiser les avantages, minimiser les coûts, synthèse”, OCDE

Quazi (2007). Economic Freedom and Foreign Direct Investment in East Asia, Journal of the Asia Pacific Economy, 12(3), 329-344.

Ramanmurti, R. & Doh, J. (2004). Rethinking Foreign Infrastructure Investment in Developing Countries, Journal of World Business, 39(2), 52-58.

Reinhart, C., & Rogoff, K. (2004). Serial Default and the “Paradox” of Rich to Poor Capital Flows, American Economic Review, 94(2), 52-58.

Root, F. and Ahmed, A. (1979). Empirical Determinants of Manufacturing Direct Investment in Developing Countries, Economic Development and Cultural Change, 27(4), 751-767.

Portes, R. & Doh J. (2005). The Determinants of Cross-Border Equity Transaction Flows, Journal of International Economics, 65(2), 151-167.

Seetenah, B., & Khadaroo, A. J. (2007). Foreign Direct Investment and Growth: New Evidences from Sub-Saharan African countries, Economic Development Africa, case.ox.ac.uk

Teulon, F. (2014). La critique de Lucas: Robert Lucas et la politique économique, Working Paper, no 567, Department of Research, Ipag Business School.




DOI: http://dx.doi.org/10.1453/jel.v1i1.159

Refbacks

  • There are currently no refbacks.


.......................................................................................................................................................................................................................................................................................................................................

Journal of Economics Library - J. Econ. Lib. - JEL - www.kspjournals.org

ISSN: 2149-2379

Editor: jel@ksplibrary.org Secretarial: secretarial@ksplibrary.org   Istanbul - Turkey.

Copyright © KSP Library