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

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Nicholas Odhiambo

University of South Africa - Department of Economics

Date Written: July 9, 2019

Abstract

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

Suggested Citation

Asongu, Simplice and Odhiambo, Nicholas, Foreign Direct Investment, Information Technology and Economic Growth Dynamics in Sub-Saharan Africa (July 9, 2019). Telecommunications Policy, Volume 44, Issue 1, February 2020, 101838 . Available at SSRN: https://ssrn.com/abstract=3417047 or http://dx.doi.org/10.2139/ssrn.3417047

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Nicholas Odhiambo

University of South Africa - Department of Economics ( email )

PO Box 392
Pretoria, 0003
South Africa

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