Foreign capital flow, institutional quality and human capital development in sub-Saharan Africa
AbstractThis study investigates the moderating effect of institutional quality on the relationship between foreign capital flow and human capital development in sub-Saharan Africa. The study uses a sample of 34 countries in sub-Saharan Africa and data for 2009 to 2019. Human capital development is m...
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Taylor & Francis Group
2023-12-01
|
| Series: | Cogent Economics & Finance |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2022.2162689 |
| _version_ | 1797658352378970112 |
|---|---|
| author | Peter Nderitu Githaiga Andrew Wenani Kilong’i |
| author_facet | Peter Nderitu Githaiga Andrew Wenani Kilong’i |
| author_sort | Peter Nderitu Githaiga |
| collection | DOAJ |
| description | AbstractThis study investigates the moderating effect of institutional quality on the relationship between foreign capital flow and human capital development in sub-Saharan Africa. The study uses a sample of 34 countries in sub-Saharan Africa and data for 2009 to 2019. Human capital development is measured using the Human Development Index (HDI). To control for endogeneity, the study uses the system generalized method of moments (GMM) estimator. The results demonstrate a positive relationship between remittances, foreign direct investment (FDI), institutional quality and human capital development. Official development assistance (ODA), on the other hand, has a negative and significant effect on human capital development. The findings further reveal that the effect of remittances and FDI on the human capital development is moderated by the institution’s quality. However, the effect of ODA on the development of human capital is not influenced by institutional quality. Findings from the study provide valuable insights to policymakers. This study highlights the importance of remittances and FDI in stimulating human capital development in sub-Saharan Africa. Additionally, the study reveals the harmful impact of official development on human capital development that necessitates policy interventions. Drawing on these findings, policymakers should undertake policy reforms to improve the quality of institutions and enhance the impact of foreign capital flows on human development. This study offers two contributions. First, the study fills a vacuum in the literature by focusing on the relationship between foreign capital flow, institutional quality, and the development of human capital in sub-Saharan Africa. Second, the SSA is one of the developing nations that has seen a significant brain drain because of widespread migration to industrialized nations. Therefore, it is necessary to investigate how much foreign capital flows through the development of human capital contribute to the socio-economic change of the region. |
| first_indexed | 2024-03-11T17:57:51Z |
| format | Article |
| id | doaj.art-3d47a875819044a7a55162439001bb92 |
| institution | Directory Open Access Journal |
| issn | 2332-2039 |
| language | English |
| last_indexed | 2024-03-11T17:57:51Z |
| publishDate | 2023-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj.art-3d47a875819044a7a55162439001bb922023-10-17T10:51:06ZengTaylor & Francis GroupCogent Economics & Finance2332-20392023-12-0111110.1080/23322039.2022.2162689Foreign capital flow, institutional quality and human capital development in sub-Saharan AfricaPeter Nderitu Githaiga0Andrew Wenani Kilong’i1Department of Accounting and Finance, Moi University, Eldoret, KenyaDepartment of History, Political science and Public Administration, Moi University, Eldoret, KenyaAbstractThis study investigates the moderating effect of institutional quality on the relationship between foreign capital flow and human capital development in sub-Saharan Africa. The study uses a sample of 34 countries in sub-Saharan Africa and data for 2009 to 2019. Human capital development is measured using the Human Development Index (HDI). To control for endogeneity, the study uses the system generalized method of moments (GMM) estimator. The results demonstrate a positive relationship between remittances, foreign direct investment (FDI), institutional quality and human capital development. Official development assistance (ODA), on the other hand, has a negative and significant effect on human capital development. The findings further reveal that the effect of remittances and FDI on the human capital development is moderated by the institution’s quality. However, the effect of ODA on the development of human capital is not influenced by institutional quality. Findings from the study provide valuable insights to policymakers. This study highlights the importance of remittances and FDI in stimulating human capital development in sub-Saharan Africa. Additionally, the study reveals the harmful impact of official development on human capital development that necessitates policy interventions. Drawing on these findings, policymakers should undertake policy reforms to improve the quality of institutions and enhance the impact of foreign capital flows on human development. This study offers two contributions. First, the study fills a vacuum in the literature by focusing on the relationship between foreign capital flow, institutional quality, and the development of human capital in sub-Saharan Africa. Second, the SSA is one of the developing nations that has seen a significant brain drain because of widespread migration to industrialized nations. Therefore, it is necessary to investigate how much foreign capital flows through the development of human capital contribute to the socio-economic change of the region.https://www.tandfonline.com/doi/10.1080/23322039.2022.2162689foreign capital flowhuman capital developmentSub-Saharan Africapanel data |
| spellingShingle | Peter Nderitu Githaiga Andrew Wenani Kilong’i Foreign capital flow, institutional quality and human capital development in sub-Saharan Africa Cogent Economics & Finance foreign capital flow human capital development Sub-Saharan Africa panel data |
| title | Foreign capital flow, institutional quality and human capital development in sub-Saharan Africa |
| title_full | Foreign capital flow, institutional quality and human capital development in sub-Saharan Africa |
| title_fullStr | Foreign capital flow, institutional quality and human capital development in sub-Saharan Africa |
| title_full_unstemmed | Foreign capital flow, institutional quality and human capital development in sub-Saharan Africa |
| title_short | Foreign capital flow, institutional quality and human capital development in sub-Saharan Africa |
| title_sort | foreign capital flow institutional quality and human capital development in sub saharan africa |
| topic | foreign capital flow human capital development Sub-Saharan Africa panel data |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2022.2162689 |
| work_keys_str_mv | AT peternderitugithaiga foreigncapitalflowinstitutionalqualityandhumancapitaldevelopmentinsubsaharanafrica AT andrewwenanikilongi foreigncapitalflowinstitutionalqualityandhumancapitaldevelopmentinsubsaharanafrica |