Institutional Quality, Foreign Direct Investment, Inflation and Economic Growth in Sub-Saharan Africa

Abstract

The paper examines how the inflation, institutional quality and foreign direct investment influence the economic growth of six chosen Sub-Saharan African economies namely Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe, between the years 1996 and 2023. Panel data analysis using fixed effects and random effects models is used in the study to investigate how indicators of governance namely government effectiveness, rule of law, and regulatory quality together with FDI inflows and inflation affect the annual GDP growth. The Hausman test provides support to the fact that the fixed effects model can be reliably estimated. The results show that economic growth is positively related to the rule of law and the quality of regulations though their impacts are weak usually in the short term. The negative influence of government effectiveness occurs under some specifications, which indicate the problems with the implementation of the policies and delivery of the public services. FDI has a positive, but statistically insignificant effect showing that investment can never lead to growth without other forms of institutional and macroeconomic reforms. The impact of inflation on growth is very devastating, hence the need to ensure price stability. The research overcomes that governance and institutional quality are essential to spur economic growth in Sub-Saharan Africa, although their effects are generally indirect and dependent on other more structural and macroeconomic determinants. According to the findings, the study proposes institutional reinforcements, enhancements in government effectiveness, attracting FDI by enabling policies and sustaining macroeconomic stability to achieve sustainable regional economic growth.

Keywords

• Foreign Direct Investment
• Governance
• Sub-Saharan Africa

Kurumsal Kalite, Doğrudan Yabancı Yatırımlar, Enflasyon ve Sahra Altı Afrika’da Ekonomik Büyüme

Abstract

Bu makale, 1996-2023 yılları arasında seçilmiş altı Sahra Altı Afrika ekonomisi olan Nijerya, Gana, Kenya, Tanzanya, Güney Afrika ve Zimbabve’de enflasyon, kurumsal kalite ve doğrudan yabancı yatırımın ekonomik büyüme üzerindeki etkilerini incelemektedir. Araştırmada, yönetişim göstergeleri olan hükümet etkinliği, hukuk devleti ve düzenleyici kalite ile DYY girişleri ve enflasyonun yıllık GSYİH büyümesini nasıl etkilediğini araştırmak için panel veri analizi, sabit etkiler ve rastgele etkiler modelleri kullanılmıştır. Hausman testi, sabit etkiler modelinin güvenilir bir şekilde tahmin edilebileceğini desteklemektedir. Sonuçlar, ekonomik büyümenin hukuk devleti ve düzenlemelerin kalitesi ile pozitif ilişkili olduğunu göstermekte, ancak bu etkiler genellikle kısa vadede zayıftır. Hükümet etkinliğinin olumsuz etkisi bazı model spesifikasyonlarında gözlenmiş olup, bu durum politika uygulamaları ve kamu hizmetlerinin sunumundaki sorunları göstermektedir. DYY’nin etkisi pozitif olmasına rağmen istatistiksel olarak anlamlı değildir; bu durum, yatırımın tek başına büyümeyi sağlayamayacağını, bunun için kurumsal ve makroekonomik reformların gerekli olduğunu ortaya koymaktadır. Enflasyonun büyüme üzerindeki etkisi oldukça yıkıcıdır; bu nedenle fiyat istikrarının sağlanması gerekmektedir. Araştırma, yönetişim ve kurumsal kalitenin Sahra Altı Afrika’da ekonomik büyümeyi teşvik etmek için temel olduğunu, ancak etkilerinin genellikle dolaylı ve diğer yapısal ve makroekonomik belirleyicilere bağlı olduğunu ortaya koymaktadır. Bulgulara dayanarak, çalışma sürdürülebilir bölgesel ekonomik büyüme için kurumsal güçlendirmeler, hükümet etkinliğinin artırılması, DYY çekici politikaların uygulanması ve makroekonomik istikrarın sürdürülmesini önermektedir.

Keywords

• Doğrudan Yabancı Yatırım
• Yönetişim
• Sahra Altı Afrika

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