This study contributes to the empirical literature by investigating the mediation effects of household consumption (HHC) in the linkages between inflows of foreign direct investment (FDI), and gross domestic product (GDP) for Sub-Sahara African Countries (SSA) for 2016. Correlation and robust mediation were used in the analysis. The result of the study shows a positive and statistically significant relation between FDI and HHC. At to the nature of the mediation effects of HHC in the relationship between GDP and FDI, the variance accounted for (VAF) is 94.4% of the total impact of FDI on GDP, indicating a full mediation. SSA should stimulate FDI to boost their economic growth.
The study is inspired by the hypothesis stated by Mamingi and Martin (2018) that the direct effect of FDI on GDP is small when FDI is considered in isolation, but indirect effect is more significant than direct effect. The paper contributes to the existing literature by conducting a quantitative research in contrast of the hypothesis of Moolio and Guech Heang (2013) indicating that indirect impacts of FDI on GDP are analyzed in qualitative approach, but not in quantitative approach.
Table of Contents
1. Introductıon
2. Literature Review
2.1. Theoretical Review
2.2. Empirical Review
3. Methodology
4. Research Results
4.1. Descriptive statistics
4.3. Mediation Analysis
5. Result Discussion and Conclusion
5.1. Results Interpretation
5.2. Conclusion
Research Objectives and Core Topics
The primary objective of this paper is to investigate the mediation effects of household consumption (HHC) on the relationship between foreign direct investment (FDI) and gross domestic product (GDP) in Sub-Saharan African countries for the year 2016 to better understand the mechanisms of economic growth.
- Mediation effects of household consumption on FDI and GDP linkage.
- Quantitative analysis of direct and indirect impacts of FDI.
- Evaluation of economic growth mechanisms in Sub-Saharan Africa.
- Robust bootstrap mediation analysis.
- Statistical relationship between FDI, GDP, and household consumption.
Excerpt from the Book
1. Introductıon
The objective of this paper is to investigate the mediation effects of house hold consumption (HHC) in the relationship between foreign direct investment (FDI) and gross domestic product (GDP) in Sub-Sahara African countries for 2016. The study is inspired by the hypothesis stated by Mamingi and Martin (2018) that the direct effect of FDI on GDP is small when FDI is considered in isolation, but indirect effect is more significant than direct effect. The paper contributes to the existing literature by conducting a quantitative research in contrast of the hypothesis of Moolio and Guech Heang (2013) indicating that indirect impacts of FDI on GDP are analyzed in qualitative approach, but not in quantitative approach.
Many researchers focused on analyzing direct contribution that FDI may have on GDP/economic growth without focusing on indirect effects produced by FDI. Even though researchers confirmed the existence of indirect effects of FDI, they did neither evaluate them nor investigate to what extent those indirect effects contribute in the process of economic growth. This constitutes a limitation of the existence literature on the impact of FDI on GDP. Analyzing direct effect without evaluating indirect effects, and the way they affect economic growth constitutes an underestimation of the FDI’s real contribution to receiving country. Mamingi and Martin (2018) affirmed that even though FDI positively affects growth, its impact is minimal when considered in isolation. They confirmed that the significant effect of FDI is rather indirect than direct.
Summary of Chapters
1. Introductıon: Outlines the study's objective to examine the mediating role of household consumption in the FDI-GDP relationship within Sub-Saharan Africa.
2. Literature Review: Provides a theoretical and empirical overview of existing FDI research, highlighting the shift from analyzing only direct effects to recognizing significant indirect impacts.
3. Methodology: Details the choice of a robust bootstrap mediation approach to analyze causal mechanisms and effectively handle non-normally distributed data.
4. Research Results: Presents descriptive statistics and the results of the mediation analysis, confirming the significance of the variables used.
5. Result Discussion and Conclusion: Interprets the findings, confirming full mediation of HHC, and provides policy recommendations for Sub-Saharan African countries.
Keywords
Foreign Direct Investment, Household Consumption, Gross Domestic Product, Mediation, Sub-Saharan Africa, Economic Growth, Quantitative Research, Indirect Effects, Robust Bootstrap, Regression Analysis, Correlation, Economic Development, Capital Accumulation, Spillover Effects, Development Economics.
Frequently Asked Questions
What is the core subject of this research paper?
The paper examines how household consumption acts as a mediator in the relationship between foreign direct investment and gross domestic product in Sub-Saharan African countries.
What are the central thematic fields covered?
The research covers international economics, economic growth, the impact of foreign direct investment, and the specific role of household consumption in stimulating economic activity.
What is the primary goal of the study?
The goal is to determine whether the impact of FDI on GDP is direct or if it primarily influences GDP indirectly through its effect on household consumption.
Which scientific methodology is applied?
The study utilizes a quantitative research approach, specifically employing robust bootstrap mediation analysis to evaluate the statistical relationships between the variables.
What topics are discussed in the main body?
The main body covers a comprehensive literature review, the methodological framework of mediation analysis, descriptive statistical analysis, and the final interpretation of the mediation path coefficients.
Which keywords best characterize this work?
Key terms include Foreign Direct Investment, Household Consumption, Gross Domestic Product, Mediation Analysis, and Sub-Saharan African economies.
What does the term "full mediation" imply in the context of this study?
Full mediation indicates that the total impact of FDI on GDP is almost entirely channeled through its influence on household consumption, as evidenced by a Variance Accounted For (VAF) value of 94.4%.
Why did the author choose to use a robust bootstrap procedure?
The author selected this method because the sample size is small and the data are not normally distributed, making standard ordinary least squares methods less reliable.
- Arbeit zitieren
- Antoine Niyungeko (Autor:in), 2020, Does Household Consumption Mediate the Linkage between Foreign Direct Investment and Gross Domestic Product?, München, GRIN Verlag, https://www.grin.com/document/902847
