Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability

Africa, corruption, foreign direct investment, institutions, natural resources, political instability

Democracy, Foreign Direct Investment and Natural Resources

Existing studies assume that the impact of democracy on FDI is the same for re- source exporting and non-resource exporting countries. This paper examines whether natural resources alter the relationship between FDI and democracy. We estimate a linear dynamic panel-data model using data from 112 developing countries over the period 1982-2007, and we .nd that there is some critical value of the share of miner- als and oil in total exports below which democracy enhances FDI, and above which democracy reduces FDI. We identify 90 countries where an expansion of democracy may enhance FDI and 22 countries where an increase in democratization may reduce FDI.Democracy, Foreign Direct Investment, Natural Resources.

On the Impact of Foreign Aid in Education on Growth: How Relevant is the Heterogeneity of Aid Flows and the Heterogeneity of Aid Recipients?

This paper examines whether foreign aid in education has a significant effect on growth. We take into consideration the heterogeneous nature of aid as well as the heterogeneity of aid recipients—we disaggregate the aid data into primary, secondary and higher education, and run separate regressions for low income and middle income countries. We find that the effect of aid varies by income as well as by the type of aid. Thus our results underscore the importance of the heterogeneity of aid flows as well as the heterogeneity of recipient countries when analyzing the effect of aid on growth.Education, Foreign Aid, Growth.

The Effect of the Liberalization of Investment Policies on Employment and Investment of Multinational Corporations in Africa

There has been a remarkable shift in the attitudes towards globalization. Specifically, the discussion among academics and policymakers has shifted from whether globalization should be encouraged to how countries can position themselves to benefit from globalization. This paper focuses on one aspect of globalization – the liberalization of investment policies – and analyzes its impact on employment and investments by multinational corporations in Africa. We use data for 33 countries over the period 1984-2003 and we employ a dynamic panel estimator for our analysis. There are two major findings. First, liberalization has a significant and positive effect on investment. Second, liberalization does not have a direct impact on multinational employment – the effect is indirect: liberalization stimulates multinational investments which in turn increases multinational employment. By increasing investment and employment from multinational firms, these liberalization programs contribute to poverty alleviation.Africa, employment, foreign direct investment, U.S. multinationals.

Is the World Flat? Differential Regulation of Domestic and Foreign-Owned Firms

This paper examines the determinants of differential employment restrictions applied to foreign vs. domestic firms. We develop a model of employment regulation and test its implications using data from the World Bank's World Business Environment Survey, conducted in 1999/2000. We find that while democratic accountability, corruption, and British legal origin reduce the extent of government intervention in firms' employment decision, they give greater advantage to domestic relative to foreign investors. Rule of law, on the other hand, has a more even effect. Better investment opportunities in the country enhance the government's bargaining power vis-à-vis investors and increase employment intervention, especially in foreign firms engaged in less tradable sectors. We also identify a host of other factors that influence employment restrictions, though none of them entail a differential impact on foreign investors. We find that after controlling for other factors, foreign investors in Latin America face a greater regulatory disadvantage vis-à-vis locals compared to other regions of the world, though this is partly counterbalanced by other effects captured in the model.Employment Regulation, Foreign Direct Investment, Political Economy.

Does Foreign Aid Mitigate the Adverse Effect of Expropriation Risk on Foreign Direct Investment?

We construct a model of FDI, risk and aid, where a country loses access to FDI and aid if the country expropriates FDI. We show that: (i) The threat of expropri- ation leads to under-investment; (ii) The optimal level of FDI decreases as the risk of expropriation rises; and (iii) Under certain conditions, aid mitigates the adverse e¤ect of expropriation risk on FDI. The empirical analysis employs data for 35 low- income countries and 28 countries in Sub-Saharan Africa, over the period 1983-2004. We ?nd that risk has a negative e¤ect on FDI, aid mitigates the adverse effect of risk on FDI, and that bilateral and multilateral aid are roughly equivalent at achieving these results. We also provide an estimate of the level of aid that would eliminate expropriation risk, and ?nd that for low-income countries, the amount of aid would need to at least double in order for aid to completely offset the effect of risk.Expropriation, Foreign Aid, FDI, Risk, Sub-Saharan Africa.

Students’ errors in solving linear equation word problems: Case study of a Ghanaian senior high school

The study examined errors students make in solving linear equation word problems with a view to expose the nature of these errors and to make suggestions for classroom teaching. A diagnostic test comprising 10 linear equation word problems, was administered to a sample (n=130) of senior high school first year Home Economics and General Arts students in a senior high school in the Central Region of Ghana. The errors students made were identified based on the modified Newman Error Hierarchical levels (NEAL), which comprise reading, comprehension, transformation, process skills and encoding errors. The results revealed that majority (60%) of the students attempted most of the questions with a few (2%) arriving at the correct answer which implies students have difficulties in tackling linear equation word problems. It revealed that about 75% of the students made comprehension errors; 86% made transformation errors which occurred during the translation of the statement to algebraic form; 84% made process skills errors which occurred during computation process, and finally 86% made encoding errors which occurred at the final stages of the work. The proportion of students reaching the encoding level was very few (< 30%). In conclusion, it can be argued from the results that students’ errors in solving linear equation word problems are due largely to their inability to comprehend and interpret the sentences in other to proceed to the process and encoding skills. Recommendations are made for supporting senior high school mathematics teachers in in-service education programmes to increase their efficacy in teaching linear equation word problems

Capital controls and foreign direct investment

This paper examines the effect of three types of capital control policies on FDI (a) the existence of multiple exchange rates; (b) restrictions on capital account, and (c) restrictions on the repatriation of export proceeds. We find that the impact of capital controls on FDI varies by region and has changed over time. In the. 1970s and 1980s, none of the policies had a significant impact on FDI. In the 1990s, all three were significant. Furthermore, capital controls have no effect on FDI to sub-Saharan Africa and the Middle East, but affects FDI to East Asia and Latin America adversely. (C) 2003 Elsevier Ltd. All rights reserved