Title : Public Spending and FDI in Benin

Authors : Rajarshi Mitra and Md. Sharif Hossain

Abstract : Although public spending on infrastructural development is an important determinant of FDI inflows, the effects of other forms of public spending on FDI inflows have remained largely inconclusive. As studies have shown, public spending may either crowd out or complement private investment, including FDI. This paper examines the direct link between total public spending and net FDI inflows (in proportion to GDP) for Benin Republic, one of the least researched West African countries in this area. A structural VECM is estimated for the period 1971-2013. The short-run effects are found to be significantly negative at all lags. Public spending is found to significantly complement FDI inflows in the long-run. The long-run effect of trade openness on FDI inflows, however, is found to significantly negative.

Journal : The Empirical Economics Letters, 17(9): Volume : 17 Year : September, 2018 Issue : 9
Pages : 1065-1072 City : Edition : Editors :
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