External Financing for Inclusive Growth in Lower - Middle Income West African Countries: Foreign Direct Investment versus Official Development Assistance

Afolabi Ibikunle J., Uzoechina B. I., Olasehinde-Williams G., Bekun F. V.

International Journal of Public Administration, cilt.46, sa.16, ss.1166-1176, 2023 (ESCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 46 Sayı: 16
  • Basım Tarihi: 2023
  • Doi Numarası: 10.1080/01900692.2022.2077759
  • Dergi Adı: International Journal of Public Administration
  • Derginin Tarandığı İndeksler: Emerging Sources Citation Index (ESCI), Scopus, IBZ Online, International Bibliography of Social Sciences, ABI/INFORM, Abstracts in Social Gerontology, Business Source Elite, Business Source Premier, PAIS International, Political Science Complete, Public Administration Abstracts, Public Affairs Index, Worldwide Political Science Abstracts
  • Sayfa Sayıları: ss.1166-1176
  • Anahtar Kelimeler: augmented mean group, bootstrap granger causality, finance, foreign direct investment, Inclusive growth, official development assistance
  • İstanbul Gelişim Üniversitesi Adresli: Evet

Özet

© 2022 Taylor & Francis Group, LLC.Most developing countries are plagued with harsh economic realities, which motivate them to seek sustainable economic growth and development in line with goal eight of the United Nations Sustainable Development Goals. To this end, this paper investigated the source of external financing that is most helpful for achieving inclusive growth in lower-middle-income West African countries. The study is a panel analysis of annual data extending from 2000 to 2019. The study employed the Emirmahmutoglu and Kose Bootstrap Granger Causality Test, Westerlund Cointegration Test, Common Correlated Mean Group estimation technique, and Augmented Mean Group estimation technique for econometric analyses. The long-run empirical results from the study showed that both foreign direct investment and foreign aid have positive and significant effects on inclusive growth, although the impact of foreign direct investment is greater than that of foreign aid. A bi-directional causality was also found to exist between inclusive growth and foreign direct investment, while no causal relationship was detected between inclusive growth and foreign aid. Given the study’s empirical outcomes, it is recommended that West African countries prioritize macroeconomic policy reforms that provide enabling conditions for foreign direct investment to thrive rather than pursue foreign aid that more often than not are misdirected.