Does Household Consumption Mediate the Linkage between Foreign Direct Investment and Gross Domestic Product?: Evidence from Sub-Sahara African Countries 2016

Scientific Study from the year 2020 in the subject Sociology - Miscellaneous, grade: "-", , language: English, abstract: This study contributes to the empirical literature by investigating the mediation effects of household consumption (HHC) in the linkages between inflows of foreign direct investment (FDI), and gross domestic product (GDP) for Sub-Sahara African Countries (SSA) for 2016. Correlation and robust mediation were used in the analysis. The result of the study shows a positive and statistically significant relation between FDI and HHC. At to the nature of the mediation effects of HHC in the relationship between GDP and FDI, the variance accounted for (VAF) is 94.4% of the total impact of FDI on GDP, indicating a full mediation. SSA should stimulate FDI to boost their economic growth. The study is inspired by the hypothesis stated by Mamingi and Martin (2018) that the direct effect of FDI on GDP is small when FDI is considered in isolation, but indirect effect is more significant than direct effect. The paper contributes to the existing literature by conducting a quantitative research in contrast of the hypothesis of Moolio and Guech Heang (2013) indicating that indirect impacts of FDI on GDP are analyzed in qualitative approach, but not in quantitative approach.