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Structural and Institutional Determinants of Investment Activity in Africa

In: Investment and Competitiveness in Africa

Author

Listed:
  • Chuku Chuku

    (University of Manchester
    University of Uyo
    African Economic Research Consortium (AERC))

  • Kenneth Onye

    (University of Uyo)

  • Hycent Ajah

    (University of Uyo)

Abstract

This paper considers the structural and institutional determinants of investment activity in selected African countries within a neoclassical growth framework. Non-parametric regression techniques, generalized method of moments and a family of panel data estimation techniques are utilized to uncover the intricacies of the relationship. Four main findings emerge; (i) financial openness and institutional quality are the most robust structural and institutional determinants of investment activity respectively, (ii) there is evidence of nonlinearity in the relationship and there exist a threshold level of financial openness that achieves the highest level of investment, (iii) the inhibiting effect of financial openness beyond the threshold is potentially mitigated by higher levels of institutional quality, (iv) promoting institutional quality is an effective strategy for facilitating investment activity in Africa.

Suggested Citation

  • Chuku Chuku & Kenneth Onye & Hycent Ajah, 2017. "Structural and Institutional Determinants of Investment Activity in Africa," Advances in African Economic, Social and Political Development, in: Diery Seck (ed.), Investment and Competitiveness in Africa, pages 25-50, Springer.
    • Handle: RePEc:spr:aaechp:978-3-319-44787-2_2
    DOI: 10.1007/978-3-319-44787-2_2
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    Cited by:

    1. Chimere O. Iheonu, 2019. "Governance and Domestic Investment in Africa," Working Papers 19/001, European Xtramile Centre of African Studies (EXCAS).

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    More about this item

    Keywords

    Investments; Financial openness; Institutional quality; Nonparametric regression; GMM;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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