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Structural and Institutional Determinants of Investment Activity in Africa

Chapter
Part of the Advances in African Economic, Social and Political Development book series (AAESPD)

Abstract

This paper considers the structural and institutional determinants of investment activity in selected African countries within a neoclassical growth framework. Non-parametric regression techniques, generalized method of moments and a family of panel data estimation techniques are utilized to uncover the intricacies of the relationship. Four main findings emerge; (i) financial openness and institutional quality are the most robust structural and institutional determinants of investment activity respectively, (ii) there is evidence of nonlinearity in the relationship and there exist a threshold level of financial openness that achieves the highest level of investment, (iii) the inhibiting effect of financial openness beyond the threshold is potentially mitigated by higher levels of institutional quality, (iv) promoting institutional quality is an effective strategy for facilitating investment activity in Africa.

Keywords

Investments Financial openness Institutional quality Nonparametric regression GMM 

JEL Classification

E22 O16 O38 

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Copyright information

© Springer International Publishing Switzerland 2017

Authors and Affiliations

  1. 1.Department of Economics and Centre for Growth and Business Cycle ResearchUniversity of ManchesterManchesterUK
  2. 2.Department of EconomicsUniversity of UyoUyoNigeria
  3. 3.African Economic Research Consortium (AERC)NairobiKenya

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