TITLE:
The Role of Productive Structures in the Attractiveness of African Economies: A “Lucas Paradox” Approach
AUTHORS:
Honoré Bidiasse, Michael Mbanjo Kitimbi, Marcelin Ndong Ntah
KEYWORDS:
Foreign Direct Investment, Total Factor Productivity, GMM-System
JOURNAL NAME:
Modern Economy,
Vol.10 No.6,
June
30,
2019
ABSTRACT: The purpose of this
article is to analyze the paradox of atrophy of capital flows to African
countries, while economic theories predict that such flows of investment should
be large enough because of higher returns on capital in countries where its
presence is relatively low in production factors. The GMM estimate of a system
of two equations for a sample of 25 African countries over the period 2004-2014
gives the following results: the low investment flows are due to the production
structures of African economies, which lack efficiency and attractiveness.
Also, by improving the structural elements of the economy that render
production ineffective, African countries can thus increase their potential to
raise larger flows of foreign direct investment.