Exploration of the dynamic interaction between oil, financial development, and foreign direct investment inflows in Africa’s leading oil-producing economies
Panel study reveals oil abundance reduces foreign direct investment inflows across leading African producers, indicating strong financial systems mitigate this resource-driven decline.
Key Points
Assess how the oil reserve-to-production ratio influences foreign direct investment inflows across Africa's leading oil producers and evaluate the moderating role of financial development.
Analyzed macro-level panel data spanning from 2000 to 2022 across the 10 leading oil-producing African nations.
Applied pooled mean group estimation techniques to examine long-run dynamics and regional differences between North Africa and Sub-Saharan Africa.
Oil reserve abundance exerts a significant long-run adverse impact on foreign direct investment inflows, with the negative effect being more pronounced in Sub-Saharan Africa than in North Africa.
Financial sector development independently promotes foreign direct investment inflows in Sub-Saharan Africa and significantly mitigates the adverse impact of oil abundance when interacted in North African economies.