The Threshold Foreign Direct Investment under Application of the Growth Identification and Facilitation Framework: case of Benin
Kokou Wotodjo Tozo
This paper aims to contribute to the first stage in applying the Growth Identification and Facilitation Framework (GIFF) of the New Structural Economics (NSE). The key point is to give additional proactive guidelines to developing governments in their effort to attract foreign direct investment (FDI) for enabling growth and structural transformation under GIFF application. To proceed, we explore the importance of an initial condition. We claim that FDI has direct effect on growth only if it reaches a certain share of a country’s GDP, it remains negative otherwise. We provide an empirical verification to our underlying hypothesis and find that FDI has positive impact on growth in Benin only if its share exceeds 2.062% of the country’s GDP. Our finding, therefore, gives Benin Government a more precise target on the amount of FDI in the beginning.
Key words: FDI, GIFF, Threshold, sample split, bootstrapping, Cobb-Douglas, Benin.
|Title:||The Threshold Foreign Direct Investment under Application of the Growth Identification and Facilitation Framework: case of Benin|
|Authors:||Kokou Wotodjo Tozo|
|Journal Name:||International Journal of Science and Business|
|ISSN:||ISSN 2520-4750 (Online), ISSN 2521-3040 (Print)|
|Media:||Online and Print|
|Date of Publication:||30/07/2018|
Cite This Article:
Tozo, K. W. (2018). The Threshold Foreign Direct Investment under Application of the Growth Identification and Facilitation Framework: case of Benin. International Journal of Science and Business, 2(3), 480-490. doi: https://doi.org/10.5281/zenodo.1323190
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Kokou Wotodjo Tozo, Researcher: Institute of New Structural Economics at Peking University & PhD candidate: University of International Business and Economics