This study contributes to the empirical literature by investigating the mediation effects of import (IMP) in the linkages between inflows of foreign direct investment (FDI), and gross domestic product (GDP) for Sub-Sahara African Countries (SSA). The purpose of this study is to investigate how FDI contributes directly and indirectly to gross domestic product (GDP) through IMP. The FDI- IMP –GDP nexus has been neglected by researchers and policymakers. Commonly used methods in various publications analyzed the relationship among two variables without considering mediator variable. The study uses Baron and Kenny method, Bootstrap procedure, Sobel test to perform mediation analysis, and test the significance of the indirect effect respectively. Using data for annual 2018 for 39 SSA countries, the study finds a partial mediation of import in the relationship between FDI and GDP. The study demonstrates that effect of FDI on GDP is carried by increasing IMP. It is therefore recommended that SSA countries should stimulate FDI to bring new technology needed to increase exports, and gross domestic product through international trade. However, imports should be controlled to give priority in use of domestic goods and services.
Table of Contents
1. Introduction
2. Literature Review
3. Methodology
4. Research Results
4.1. Descriptive statistics
4.2. Mediation Analysis Result
5. Result discussion and conclusion
5.1. Result discussion
5.2. Conclusion
6. Reference
Research Objectives and Themes
This study aims to examine the mediation effects of imports (IMP) on the relationship between foreign direct investment (FDI) inflows and the gross domestic product (GDP) within 39 Sub-Saharan African countries, utilizing quantitative methods to bridge a gap in the existing literature.
- The role of imports as a mediator in the FDI-GDP nexus.
- Quantitative evaluation of direct versus indirect effects of FDI on economic growth.
- Application of mediation analysis frameworks, specifically the Baron and Kenny method.
- Empirical analysis of 39 Sub-Saharan African countries based on 2018 annual data.
Excerpt from the Book
1. Introduction
The linkage between FDI-IMP-GDP did not get much attention in the literature. Little is still known about how FDI increases imports and imports in return increase GDP. Not analysis the FDI-IMP-GDP nexus leads to misunderstanding of the mechanism by which FDI contributes. The paper contributes to the existing literature by conducting a quantitative research in contrast of the hypothesis of Moolio and Guech Heang (2013) indicating that indirect impact of FDI on GDP is analyzed in qualitative approach, but not in quantitative approach. Many researchers focused on analyzing direct contribution that FDI may have on GDP/economic growth without focusing on indirect effects produced by FDI. Even though researchers confirmed the existence of indirect effects of FDI, they did neither evaluate them nor investigate to what extent those indirect effects contribute in the process of economic growth. This constitutes a limitation of the existence literature on the impact of FDI on GDP. Analyzing direct effect without evaluating indirect effects, and the way they affect economic growth constitutes an underestimation of the FDI’s real contribution in receiving country.
Summary of Chapters
1. Introduction: Discusses the research gap regarding the indirect effects of FDI on GDP through imports and establishes the study's objective to conduct a quantitative analysis in Sub-Saharan Africa.
2. Literature Review: Reviews existing theories and studies on FDI, trade, and economic growth, highlighting conflicting evidence and the need for further investigation into mediation effects.
3. Methodology: Outlines the use of the Baron and Kenny mediation approach, describing the regression equations and statistical tests employed to analyze the relationship between FDI, imports, and GDP.
4. Research Results: Presents the descriptive statistics of the collected data and reports the findings of the mediation analysis, confirming the statistical significance of the indirect effect.
5. Result discussion and conclusion: Interprets the statistical findings, confirming a partial mediation effect of imports, and summarizes the study's conclusions and policy recommendations for SSA countries.
6. Reference: Lists the academic literature and sources cited throughout the study.
Keywords
Foreign Direct Investment, Import, Gross Domestic Product, Mediation, Sub-Saharan Africa, Economic Growth, Quantitative Analysis, Baron and Kenny Method, Indirect Effects, Trade, Economic Policy, Regression Analysis, Capital Inflows, Development Economics.
Frequently Asked Questions
What is the primary focus of this research?
The research focuses on understanding the mediation effect of imports on the relationship between Foreign Direct Investment (FDI) and Gross Domestic Product (GDP) in Sub-Saharan African countries.
What are the central themes of the work?
The central themes include the mechanism of how FDI contributes to economic growth, the role of imports as a mediator, and the quantitative evaluation of direct and indirect economic impacts in developing economies.
What is the core research question?
The study seeks to answer to what extent FDI contributes directly and indirectly to GDP through the mediation of imports in the analyzed region.
Which scientific methodology is applied?
The study utilizes the Baron and Kenny mediation analysis approach, supported by bootstrap procedures and the Sobel test, to verify indirect effects within the regression models.
What does the main body of the text cover?
The main body covers the theoretical background, the methodological framework, descriptive statistics of 39 SSA countries, and an empirical mediation analysis of the collected 2018 annual data.
Which keywords characterize this work?
Key terms include Foreign Direct Investment, Mediation, Import, GDP, Sub-Saharan Africa, and Quantitative Analysis.
What are the specific findings regarding the mediation effect?
The study finds that there is a partial mediation of imports in the relationship between FDI and GDP, meaning that FDI influences economic growth partly by stimulating imports.
How does the author characterize the FDI-GDP relationship in SSA?
The author concludes that FDI generally has a positive contribution to GDP, but highlights that the indirect path through imports is significant and often overlooked in existing literature.
Are there limitations mentioned in the study?
Yes, the author notes that the study is limited by its use of 2018 annual data and recommends further research into the determinants of FDI to better stimulate foreign investment.
- Citation du texte
- Antoine Niyungeko (Auteur), 2020, The mediation effects of import on FDI and GDP in Sub-Sahara African countries, Munich, GRIN Verlag, https://www.grin.com/document/935557
