FDI and Welfare Dynamics in Africa |
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| Authors: | Teresia Kaulihowa Charles Adjasi |
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| Affiliation: | 1. University of Namibia, Mandume Ndemufayo Avenue, Pioneers park, P/Bag 13301, Windhoek, Namibia;2. University of Stellenbosch, Carl Cronje Drive, Bellville, P.O Box 610, Bellville 7535, South Africa |
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| Abstract: | This article examines the welfare impact of foreign direct investment (FDI) in a panel of 20 African countries over the period 2000–2013. We explore the multifactor and nonmonetary measures of welfare and the nonlinear effect of FDI on welfare. We used the Driscoll and Kraay standard errors and augmented mean group (AMG) estimator by Eberhardt and Teal (2010) to account for cross‐sectional dependency, endogeneity, and heterogeneity within panel units. The results indicate that although FDI is welfare enhancing, the nonlinear terms report mixed findings. When a multifactor indicator is employed, the increase in the nonlinear term is lower than the linear part. However, there is strong evidence that FDI is ultimately welfare enhancing when a nonmonetary indicator is employed. From an international business perspective, the findings have unlocked the welfare effects of international business on African host economies. International businesses through FDI can enhance welfare in Africa countries. However, the optimal efficacy of FDI‐welfare impact differs across the various dimensions of welfare. © 2017 Wiley Periodicals, Inc. |
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| Keywords: | FDI Multidimensional poverty Africa |
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