IDEAS home Printed from https://ideas.repec.org/a/sae/sagope/v11y2021i4p21582440211061334.html
   My bibliography  Save this article

Level of Income and the Investment Development Path Theory: Evidence From Africa

Author

Listed:
  • Justice G. Djokoto
  • Paragon Pomeyie

Abstract

The investment development path theory delineates countries in stages I, II, III, IV, and V according to the level of development as developing, transition, and developed countries. The World Bank’s classification of countries by income, however, identifies countries as lower-income, lower-middle-income, upper-middle-income, and high income. In this paper, we test the investment development path theory for countries based on the level of income using data from 1980 to 2019. Africa offers unique data as it is the only continent made up of entirely developing countries together with countries that fit into all four classifications based on income. Income level classifications appear to enhance the position of countries within the investment development path ahead of that based on the United Nations classification. The use of income classification should complement that of the United Nations in the empirical testing of the investment development path theory for a more current investment development path status.

Suggested Citation

  • Justice G. Djokoto & Paragon Pomeyie, 2021. "Level of Income and the Investment Development Path Theory: Evidence From Africa," SAGE Open, , vol. 11(4), pages 21582440211, November.
    • Handle: RePEc:sae:sagope:v:11:y:2021:i:4:p:21582440211061334
    DOI: 10.1177/21582440211061334
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/21582440211061334
    Download Restriction: no
    File URL: https://libkey.io/10.1177/21582440211061334?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Cristiano Cechella & Gustavo H. B. Franco & Tomaz Dentinho & Joaquim RAMOS SILVA, 2012. "The brazilian economy position on the Investment Development Path (IDP)," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 29-39, December.
    2. Frenken, Jonas Hub & Mbuvi, Dorcas, 2017. "Country risk, FDI flows and convergence trends in the context of the Investment Development Path," MERIT Working Papers 2017-005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Angus C Chu, 2020. "Advanced Macroeconomics:An Introduction for Undergraduates," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number q0267, August.
    4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    5. Dunning, John H & Rugman, Alan M, 1985. "The Influence of Hymer's Dissertation on the Theory of Foreign Direct Investment," American Economic Review, American Economic Association, vol. 75(2), pages 228-232, May.
    6. John H Dunning, 1980. "Towards an Eclectic Theory of International Production: Some Empirical Tests," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(1), pages 9-31, March.
    7. Sonia Ferencikova Sr. & Sonia Ferencikova Jr., 2012. "Outward Investment Flows and the Development Path," Eastern European Economics, Taylor & Francis Journals, vol. 50(2), pages 85-111, March.
    8. Swati Virmani & Edmund Amann, 2015. "Is the evolution of India’s Outward FDI consistent with Dunning’s Investment Development Path sequence?," Working Papers 92160912, Lancaster University Management School, Economics Department.
    9. Kalotay, Kalman, 2008. "Russian transnationals and international investment paradigms," Research in International Business and Finance, Elsevier, vol. 22(2), pages 85-107, June.
    10. Dunning, John H, 1979. "Explaining Changing Patterns of International Production: In Defence of the Eclectic Theory," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(4), pages 269-295, November.
    11. William Gould & Ali S. Hadi, 1993. "Identifying multivariate outliers," Stata Technical Bulletin, StataCorp LP, vol. 2(11).
    12. Wu, De-Min, 1973. "Alternative Tests of Independence Between Stochastic Regressors and Disturbances," Econometrica, Econometric Society, vol. 41(4), pages 733-750, July.
    13. Jan Knoerich, 2017. "How does outward foreign direct investment contribute to economic development in less advanced home countries?," Oxford Development Studies, Taylor & Francis Journals, vol. 45(4), pages 443-459, October.
    14. Wladimir Andreff, 2003. "The newly emerging TNCs from economies in transition: a comparison with Third World outward FDI," Post-Print halshs-00274654, HAL.
    15. repec:hrs:journl:v:4:y:2012:i:2:p:29-39 is not listed on IDEAS
    16. John Dunning, 1981. "Explaining the international direct investment position of countries: Towards a dynamic or developmental approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 117(1), pages 30-64, March.
    17. Dunning, John H., 1983. "Market power of the firm and international transfer of technology : A historical excursion," International Journal of Industrial Organization, Elsevier, vol. 1(4), pages 333-351, December.
    18. Marian Gorynia & Jan Nowak & Piotr Trąpczyński & Radosław Wolniak, 2019. "Geographic patterns of Poland’s FDI: the investment development path perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 31(4), pages 507-529, July.
    19. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 1-31, March.
    20. Chu, Angus C., 2020. "Advanced Macroeconomics for Undergraduates," MPRA Paper 98249, University Library of Munich, Germany.
    21. Xuguang Song, 2019. "Understanding Chinese GDP," Springer Books, Springer, number 978-981-32-9733-3, January.
    22. Stoian, Carmen, 2013. "Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment," International Business Review, Elsevier, vol. 22(3), pages 615-637.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yanfeng Liu & Xue Li & Xiaonan Zhu & Min-Kyu Lee & Po-Lin Lai, 2023. "The theoretical systems of OFDI location determinants in global north and global south economies," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chris Wagner, 2020. "Deducing a state-of-the-art presentation of the Eclectic Paradigm from four decades of development: a systematic literature review," Management Review Quarterly, Springer, vol. 70(1), pages 51-96, February.
    2. Iavor Marangozov, 2005. "From Practice to Theory of the International Joint Ventures," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 44-77.
    3. Csaba Weiner, 2017. "International expansion of Russian multinationals - a focus on home-country push factors, Europe and five CEE countries," IWE Working Papers 236, Institute for World Economics - Centre for Economic and Regional Studies.
    4. Paul, Justin & Feliciano-Cestero, María M., 2021. "Five decades of research on foreign direct investment by MNEs: An overview and research agenda," Journal of Business Research, Elsevier, vol. 124(C), pages 800-812.
    5. Surdu, Irina & Mellahi, Kamel, 2016. "Theoretical foundations of equity based foreign market entry decisions: A review of the literature and recommendations for future research," International Business Review, Elsevier, vol. 25(5), pages 1169-1184.
    6. Gorynia, Marian & Nowak, Jan & Trąpczyński, Piotr & Wolniak, Radosław, 2019. "Friend or Foe? On the role of institutional reforms in the investment development path of Central and East European economies," International Business Review, Elsevier, vol. 28(3), pages 575-587.
    7. Mishra, Bikash Ranjan, 2011. "Inward FDI and firm-specific advantages of Indian manufacturing industries," MPRA Paper 35119, University Library of Munich, Germany.
    8. Rajneesh Narula & Tiju Prasad Kodiyat, 2014. "How Home Country Weaknesses Can Constrain Further EMNE Growth: Extrapolating from the Example of India," John H Dunning Centre for International Business Discussion Papers jhd-dp2014-01, Henley Business School, University of Reading.
    9. Kazemi, Morteza & Azman-Saini, W.N.W. & Naseeem, N.A.M, 2018. "Outward Foreign Direct Investment and Domestic Output: Evidence from East Asian Economies," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(1), pages 297-309.
    10. Lydia Bals & Jon F. Kirchoff & Kai Foerstl, 2016. "Exploring the reshoring and insourcing decision making process: toward an agenda for future research," Operations Management Research, Springer, vol. 9(3), pages 102-116, December.
    11. Stoian, Carmen & Mohr, Alex, 2016. "Outward foreign direct investment from emerging economies: escaping home country regulative voids," International Business Review, Elsevier, vol. 25(5), pages 1124-1135.
    12. Esiyok, Bulent, 2011. "Determinants of foreign direct investment in Turkey: a panel study approach," MPRA Paper 36568, University Library of Munich, Germany.
    13. Dorota Ciesielska-Maciagowska & Marcin Koltuniak, 2021. "Foreign Direct Investments and Home Country’s Institutions: The Case of CEE Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 335-353.
    14. Amar Iqbal Anwar & Mazhar Y Mughal, 2015. "Determinants of Russian Firms' Merger and Acquisition Activities," Economics Bulletin, AccessEcon, vol. 35(4), pages 2382-2394.
    15. Yanfeng Liu & Xue Li & Xiaonan Zhu & Min-Kyu Lee & Po-Lin Lai, 2023. "The theoretical systems of OFDI location determinants in global north and global south economies," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.
    16. Zhang, Huiying & Yang, Xiaohui, 2016. "Trade-related aspects of intellectual property rights agreements and the upsurge in foreign direct investment in developing countries," Economic Analysis and Policy, Elsevier, vol. 50(C), pages 91-99.
    17. Gnangnon, Sèna Kimm, 2018. "Effect of multilateral trade liberalization on foreign direct investment outflows amid structural economic vulnerability in developing countries," Research in International Business and Finance, Elsevier, vol. 45(C), pages 15-29.
    18. Le Chang & Jing Li & Kee-Cheok Cheong & Lim-Thye Goh, 2021. "Can Existing Theories Explain China’s Outward Foreign Direct Investment in Belt and Road Countries," Sustainability, MDPI, vol. 13(3), pages 1-17, January.
    19. Halkos, George Emmanuel & Tzeremes, Nickolaos G., 2007. "Productivity efficiency and firm size: An empirical analysis of foreign owned companies," International Business Review, Elsevier, vol. 16(6), pages 713-731, December.
    20. Dohse, Dirk & Hassink, Robert & Klaerding, Claudia, 2012. "Emerging multinationals, international knowledge flows and economic geography: A research agenda," Kiel Working Papers 1776, Kiel Institute for the World Economy (IfW Kiel).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:sagope:v:11:y:2021:i:4:p:21582440211061334. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.