BazEkon - The Main Library of the Cracow University of Economics

BazEkon home page

Main menu

Author
Orji Anthony (University of Nigeria, Nigeria), Ogbuabor Jonathan E. (University of Nigeria, Nigeria), Chiangi Aza Gabriel (University of Nigeria, Nigeria), Anthony-Orji Onyinye I. (University of Nigeria, Nigeria)
Title
Does Foreign Presence Influence the Level of Firm Technical Efficiency? Evidence from Africa
Source
Econometric Research in Finance, 2021, vol. 6, nr 1, s. 1-20, rys., bibliogr. 61 poz.
Keyword
Inwestycje bezpośrednie, Inwestycje zagraniczne, Analiza stochastyczna
Direct investments, Foreign investment, Stochastic analysis
Note
JEL classification: D22, D24, F21, F23
summ.
Country
Aglomeracja szczecińska
Szczecin agglomeration
Abstract
his study investigates the impact of foreign direct investment on the level of firm technical efficiency in West Africa. Firms from Nigeria, Ghana, Sierra Leone and the Gambia were sampled due to the fact that they used to belong to the British Empire. The data, sourced from the World Bank enterprise survey, covers the period from 2006 to 2018, with the sam- pled countries having data for different years. A time varying stochastic frontier production function for panel was developed for this enquiry. The find- ings of the study show that foreign direct investment has a significant and positive impact on both technical efficiency and productivity of firms in West Africa. Controlling for other effects, international trade and firm size both have positive and significant effects on firm level technical efficiency. Therefore, policies should be aimed at encouraging more inflows and maintenance of the stock of foreign direct investment to avert divestments. This includes, but is not limited to, ensuring sociopolitical stability and introducing poli- cies that would remove bureaucratic bottlenecks from the path of direct investment inflow and simplify the process of doing business in these countries(original abstract)
Accessibility
The Library of Warsaw School of Economics
Full text
Show
Bibliography
Show
  1. Aigner, D., Lovell, C. K., Schmidt, P. (1977). Formulation and Estimation of Stochastic Frontier Production Function Models. "Journal of Econometrics", 6(1):21-37.
  2. Anthony-Orji, O. I., Orji, A., Ogbuabor, J. E., Nwosu, E. O. (2018). Disaggregated Foreign Capital Inflows and Economic Growth in a Developing Economy: Empirical Evidence from Nigeria. "Journal of Empirical Studies", 5(1):1-11.
  3. Anyanwu, J. C. (2006). Promoting of Investment in Africa. "African Development Review", 18(1):42-71.
  4. Arnold, J. M. Javorcik, B. S. (2009). Gifted Kids or Pushy Parents? Foreign Direct Investment and Plant Productivity in Indonesia. "Journal of International Economics", 79(1):42-53.
  5. Aswathappa, K. (2015). International business. New Delhi: Tata McGraw Hill Pub. Co.
  6. Badunenko, O., Fritsch, M., Stephan, A., (2006). What Determines the Technical Efficiency of a Firm? The Importance of Industry, Location, and Size. Technical Report 33/2006, Friedrich-Schiller-Universitat Jena, Wirtschaftswissenschaftliche Fakultat.
  7. Bassiratu, B. M. (2018). The Effect of Foreign Direct Investment on the Economic Growth of Sierra Leone. "International Journal of Information Research and Review", 05(08):5628-5631.
  8. Battese, G. E. (1992). Frontier Production Functions and Technical Efficiency: A Survey of Empirical Applications in Agricultural Economics. "Agricultural Economics", 7(3-4):185-208.
  9. Battese, G. E. Coelli, T. J. (1995). A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data." Empirical Economics", 20(2):325-332.
  10. Burker, M., Franco, C., Minerva, G. A. (2013). Foreign Ownership, Firm Performance, and The Geography of Civic Capital. "Regional Science and Urban Economics", 43(6):964-984.
  11. Caves, R. E. (1974). Multinational Firms, Competition, and Productivity in Host-Country Markets." Economica", 41(162):176-193.
  12. Charnes, A., Cooper, W. W., Rhodes, E. (1978). Measuring the Efficiency of Decision Making Units." European Journal of Operational Research", 2(6):429-444.
  13. Christensen, L. R., Jorgenson, D. W., Lau, L. J. (1973). Transcendental Logarithmic Production Frontiers.The Review of Economics and Statistics, pages 28-45.
  14. Conteh, S. M. (2014). Foreign Direct Investment and Economic Development in Sierra Leone: Challenges and Prospects. PhD thesis, University Of Ghana.
  15. Dang, C., Li, Z. F., Yang, C. (2018). Measuring Firm Size in Empirical Corporate Finance. "Journal of Banking & Finance", 86:159-176.
  16. De Mello Jr, L. R. (1997). Foreign Direct Investment in Developing Countries and Growth: A Selective Survey. "The Journal of Development Studies", 34(1):1-34.
  17. Dimelis, S. Louri, H. (2002). Foreign Ownership and Production Efficiency: A Quantile Regression Analysis. Oxford Economic Papers, 54(3):449-469.
  18. Dunning, J. H. (1988). The Theory of International Production." The International Trade Journal", 3(1):21-66.
  19. Dupasquier, C. Osakwe, P. N. (2003). Performance, Promotion, and Prospects for Foreign Investment in Africa: National, Regional, and International Responsibilities. In Eminent Persons' Meeting on 'Promotion of Investment in Africa', Tokyo.
  20. Ehimare, O. A. (2011). Foreign Direct Investment and Its Effect on the Nigerian Economy. "Business Intelligence Journal", 4(2):253-261.
  21. Ghali, S. Rezgui, S. (2011). FDI Contribution to Technical Efficiency in the Tunisian Manufacturing Sector: Evidence from Micro-panel Data." International Economic Journal", 25(2):319-339.
  22. Haddad, M. Harrison, A. E. (1993). Are There Positive Spillovers from Foreign Direct Investment? Evidence from Panel Data for Morocco." Journal of Development Economics", 42(1):51-74.
  23. Heathfield, D. F. Wibe, S. (1987). An Introduction to Cost and Production Functions. London: Macmillan.
  24. Huang, C. J. Liu, J.-T. (1994). Estimation of a Non-Neutral Stochastic Frontier Production Function. "Journal of Productivity Analysis", 5(2):171-180.
  25. Kinda, T. (2012). On the Drivers of FDI and Portfolio Investment: A Simultaneous Equations Approach. "International Economic Journal", 26(1):1-22.
  26. Kodde, D. A. Palm, F. C. (1986). Wald Criteria for Jointly Testing Equality and Inequality Restrictions. "Econometrica", pages 1243-1248.
  27. Konara, P., Ha, Y. J., McDonald, F., Wei, Y. (2015). Introduction: The Rise of Multinationals from Emerging Economies-Achieving a New Balance. In The Rise of Multinationals from Emerging Economies, pages 1-6. Palgrave Macmillan, London.
  28. Kopp, R. J. Smith, V. K. (1980). Frontier Production Function Estimates for Steam Electric Generation: A Comparative Analysis. "Southern Economic Journal", pages 1049-1059.
  29. Kumbhakar, S. C., Ghosh, S., McGuckin, J. T. (1991). A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in US Dairy Farms. "Journal of Business & Economic Statistics", 9(3):279-286.
  30. Kumbhakar, S. C., Wang, H.-J., Horncastle, A. P. (2015). A Practitioner's Guide to Stochastic Frontier Analysis Using Stata. Cambridge University Press.
  31. Kunle, A. M., Olowe, S., Oluwafolakemi, F. O. (2014). Impact of Foreign Direct Investment on Nigeria Economic Growth. "International Journal of Academic Research in Business and Social Sciences", 4(8):234.
  32. Lundvall, K. Battese, G. E. (2000). Firm Size, Age and Efficiency: Evidence from Kenyan Manufacturing Firms. The Journal of Development Studies, 36(3):146-163.
  33. Macaulay Egbo, D. (2012). Foreign Direct Investment and the Performance of the Nigerian Economy. In 1st International Technology, Education and Environment Conference, pages 629-633.
  34. Mahadevan, R. (2000). Sources of Output Growth in Singapore's Services Sector. "Empirical Economics", 25(3):495-506.
  35. Mahembe, E. E. and Odhiambo, N. M. (2016). Does Foreign Direct Investment Cause Economic Growth? A Dynamic Panel Data Analysis for SADC Countries. "International Journal of Emerging Markets", 11(3):316-332.
  36. Markusen, A. (2002). Sticky Places in Slippery Space: A Typology of Industrial Districts. In The New Industrial Geography, pages 210-146. Routledge.
  37. Meeusen, W. van Den Broeck, J. (1977). Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error. International Economic Review, pages 435-444.
  38. Moran, T., Graham, E. M., Blomstrom, M. (2005). Does Foreign Direct Investment Promote Development? Peterson Institute.
  39. Moss, T., Ramachandran, V., Shah, M. K. (2004). Is Africa's Scepticism of Foreign Capital Justified? Evidence from East African Firm Survey Data. Center for Global Development, Working Papers.
  40. OECD (2018). FDI in Figures. Retrieved from http://www.oecd.org/investment/FDI-in-Figures-October-2018.pdf.
  41. Orji, A., Anthony-Orji, O. I., Nchege, J. E., Okafor, J. (2015). Manufacturing Output and Foreign Direct Investment in Nigeria: A New Evidence. International "Journal of Academic Research in Economics and Management Sciences", 4(3):16-28.
  42. Orji, A., Ogbuabor, J. E., Nwosu, E., Anthony-orji, O. I., Okpala, A. J. (2019). FDI, Remittance Inflows, and Economic Development In A Developing Economy: What Do Nigerian Data Show? "Journal of Academic Research in Economics", 11(1):27-45.
  43. Orji, A., Uche, A. S., Ilori, E. A. (2014). Foreign Capital Inflows and Growth: An Empirical Analysis of WAMZ Experience. "International Journal of Economics and Financial Issues", 4(4):971-983.
  44. Pakenham, T. (1991). The Scramble for Africa. London Abacus.
  45. Palmer, S. and Torgerson, D. J. (1999). Definitions of Efficiency. "Bmj", 318(7191):1136.
  46. Pettinger, T. (2017). Technical Efficiency Definition. Retrieved 24th June, 2019, from https://www.economicshelp.org/blog/glossary/technical-efficiency/.
  47. Ramaswamy, K. (1994). Small-Scale Manufacturing Industries: Some Aspects of Size, Growth and Structure. Economic and Political Weekly, pages M13-M23.
  48. Sari, D. W., Khalifah, N. A., and Suyanto, S. (2016). The Spillover Effects of Foreign Direct Investment on the Firms' Productivity Performances." Journal of Productivity Analysis", 46(2-3):199-233.
  49. Smith, S. C., Cin, B.-C., Vodopivec, M. (1997). Privatization Incidence, Ownership Forms, and Firm Performance: Evidence from Slovenia. "Journal of Comparative Economics", 25(2):158-179.
  50. Sun, P. and Heshmati, A. (2010). International Trade and Its Effects on Economic Growth in China. IZA discussion paper.
  51. Suyanto, M., Bloch, H., Salim, R. A. (2012). Foreign Direct Investment Spillovers and Productivity Growth in Indonesian Garment and Electronics Manufacturing. The "Journal of Development Studies", 48(10):1397-1411.
  52. Suyanto, S. and Salim, R. (2011). Foreign Direct Investment Spillovers and Technical Efficiency in the Indonesian Pharmaceutical Sector: Firm Level Evidence. "Applied Economics", 45(3):383-395.
  53. Svedin, D. Stage, J. (2016). Impacts of Foreign Direct Investment on Efficiency in Swedish Manufacturing. "SpringerPlus", 5(1):614.
  54. UNCTAD (2017). World Investment Report 2017: Investment and the Digital Economy. UN, New York, https://doi.org/10.18356/e692e49c-en.
  55. UNCTAD (2018). World Investment Report 2018: Investment and the Digital Economy. UN, New York, https://doi.org/10.18356/ebb78749-en.
  56. UNCTAD (2019). World Investment Report 2019: Investment and the Digital Economy. UN, New York, https://unctad.org/system/files/official-document/wir2019_en.pdf.
  57. UNCTAD (2020). World Investment Report 2020: Investment and the Digital Economy. UN, New York, https://unctad.org/system/files/official-document/wir2020_en.pdf.
  58. Vu, H. D. (2016). Technical Efficiency of FDI Firms in the Vietnamese Manufacturing Sector. "Review of Economic Perspectives", 16(3):205-230.
  59. Wang, M. Wong, M. S. (2016). Effects of Foreign Direct Investment on Firm-level Technical Efficiency: Stochastic Frontier Model Evidence from Chinese Manufacturing Firms." Atlantic Economic Journal", 44(3):335-361.
  60. World Bank (2017). Global Investment Competitiveness Report 2017-2018: Foreign Investor Perspectives and Policy Implications. World Bank Group, Washington, D.C., http://documents.worldbank.org/curated/en/169531510741671962/Global-investment-competitiveness-report-2017-2018-foreign-investor-perspectives-and-policy-implications.
  61. Zhou, Y. (2014). FDI and Technical Efficiency in Manufacturing Firms: A Stochastic Frontier Approach.
Cited by
Show
ISSN
2451-1935
2451-2370
Language
eng
URI / DOI
https://doi.org/10.2478/erfin-2021-0001
Share on Facebook Share on Twitter Share on Google+ Share on Pinterest Share on LinkedIn Wyślij znajomemu