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Are growth effects of foreign capital significant for increasing access to electricity in Africa?

Mbiankeu Nguea, Stéphane and KAGUENDO, Ulrich Vianney Elisée (2022): Are growth effects of foreign capital significant for increasing access to electricity in Africa?

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Abstract

Despite the advancements towards Sustainable Development Goal 7, access to electricity in Africa is still lagging far behind the goal. In this study, we employ a panel data covering 36 African countries from 2000 to 2017 to investigate the effects of FDI, remittances and foreign aid on access to electricity. We use a dynamic empirical model based on system GMM to control for unobserved heterogeneity and potential endogeneity of the explanatory variables. The results show that FDI and remittances matter for increasing access to electricity. Also, foreign aid reduces access to electricity. We also find that remittances reduce urban-rural disparities in access to electricity, while FDI and foreign aid increase disparities. Finally, these results remain globally robust when we perform sub-regional analyses.

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