Immigrant-led foreign direct investment and the dynamics of cross-border capital allocation in Africa

Abstract

This study investigates the effect of immigration on Foreign Direct Investment in 21 African countries between 1990 and 2021. Using random effects, fixed effects, and heteroscedasticity-based identification methods in a dynamic panel model, we found that countries with higher levels of past Foreign Direct Investment inflows and a higher proportion of Foreign Direct Investment-bound immigrants are more appealing to new investors. These findings encourage a critical examination of immigration policy aimed at promptly admitting skilled and enterprising immigrants while remaining committed to ethical principles, promoting social equity, and safeguarding fundamental human rights.

Keywords

• First immigrant-led foreign direct investment effects
• foreign direct investment inflow
• African countries
• middle income countries
• Migration Networks
• Economics and Development