Foreign Direct Investment, Information Technology and Economic Growth Dynamics in Sub-Saharan Africa
Telecommunications Policy, Volume 44, Issue 1, February 2020, 101838
31 Pages Posted: 10 Jul 2019 Last revised: 2 Feb 2020
Date Written: July 9, 2019
The research assesses how information and communication technology (ICT) modulates the effect of foreign direct investment (FDI) on economic growth dynamics in 25 countries in Sub-Saharan Africa for the period 1980-2014. The employed economic growth dynamics are Gross Domestic Product (GDP) growth, real GDP and GDP per capita while ICT is measured by mobile phone penetration and internet penetration. The empirical evidence is based on the Generalised Method of Moments. The study finds that both internet penetration and mobile phone penetration overwhelmingly modulate FDI to induce overall positive net effects on all three economic growth dynamics. Moreover, the positive net effects are consistently more apparent in internet-centric regressions compared to “mobile phone”-oriented specifications. In the light of negative interactive effects, net effects are decomposed to provide thresholds at which ICT policy variables should be complemented with other policy initiatives in order to engender favorable outcomes on economic growth dynamics. Practical and theoretical implications are discussed.
Keywords: Economic Output; Foreign Investment; Information Technology; Sub-Saharan Africa
JEL Classification: E23; F21; F30; L96; O55
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