Foreign capital on suitable development: the moderating influence of institutional quality

Abstract

Over the past decades, the continent of Africa has significantly depended on foreign capital flows to propel growth; however, concerns remain about their environmental and food security consequences in vulnerable contexts. Although foreign capital can either worsen environmental degradation or enhance ecological transition, empirical evidence remains limited, especially in Africa. Again, few studies have examined how institutional structures and partnerships condition these relationships. This creates a theoretical and empirical gap regarding the moderating role of institutional quality and partnerships in shaping the environmental and food security outcomes of foreign capital in Africa. Hence, this thesis examines the effect of foreign capital on ecosystem conditions and the moderating role of institutional quality in Africa, while also exploring how foreign capital influences food security when conditioned on Partnerships for the Goals. Covering the period from 2000 to 2022, the study is structured around three main objectives. The study employed a two-step system Generalised Method of Moments (GMM) for the econometric estimation and complements it with dynamic panel threshold techniques to capture nonlinearities. The first objective assesses the effect of foreign capital on ecosystems; again, the study investigates the moderating role of institutional quality in foreign capital-ecosystem contagion. Building on this, the second objective investigates the moderating role of political institutions in the relationship between economic institutions and ecosystem contagion. The third objective shifts focus to food security, examining how the impact of foreign capital on food security changes when conditioned on partnership for the goals. The results provide several important insights. First, the findings indicate that the impact of foreign capital indicators, including external debt, remittances, FDI, and portfolio investment, on ecosystems is more pronounced above the threshold. These thresholds suggest that beyond certain levels, foreign capital inflows contribute meaningfully to ecosystem improvement. Second, the analysis shows that stronger political and economic institutions significantly enhance ecosystem transitions, highlighting the importance of governance quality. Third, the study reveals that the conditional effect of foreign capital on food security becomes positive when moderated by partnership for the goals. This implies that while the unconditional effect of foreign capital on food security is negative, effective partnerships can reverse this outcome and strengthen food security. The study extends the ecological modernization theory by revealing how international capital supports ecosystem and food security sustainability in Africa. The study recommend that foreign capital reforms should be done in a manner to enhance ecosystem and food security financing in Africa. The study made the first attempt to link foreign capital to ecosystem and food security in Africa.

Emashumini eminyaka edlule, izwekazi lase Afrika lithembele kakhulu ekungeneni kwezimali zakwamanye amazwe ukuze liqhubekele phambili ekukhuleni komnotho; nokho, ukukhathazeka kusaqhubeka mayelana nendawo yazo ezungezile kanye nemiphumela yokuphepha kokudla ezimweni ezingozini. Nakuba izimali zakwamanye amazwe zingalimaza kakhulu ukucekelwa phansi kwemvelo noma isekela uguquko lwezemvelo, ubufakazi obunamandla buhlala bunomkhawulo, ikakhulukazi e-Afrika. Ngaphezu kwalokho, ucwaningo olumbalwa luye lwaphenya ukuthi izinhlaka zezikhungo kanye nokusebenzisana kubeka lobubudlelwano ukuthi bube Nezinjongo Zokuthuthukiswa Okusimeme. Ngenxa yalokho, kunegebe le-theory kanye nokusebenza mayelana nezindima zokulinganisa zekhwalithi yesikhungo kanye nobudlelwano ekubumbeni imiphumela yezemvelo kanye nokuvikeleka kokudla kwezimali zakwamanye amazwe e-Afrika. Le-thesis ihlola umthelela wemali yangaphandle ezimeni ze-ecosystem, ngokubheka ikakhulukazi indima yokulinganisa izinga lesikhungo e-Afrika. Iphinde ihlole ukuthi izimali zakwamanye amazwe zikuthinta kanjani ukuvikeleka kokudla uma kuncike ebudlelwaneni bezinjongo. Ihlanganisa isikhathi kusuka ku- 2000 kuya ku-2022, ukuhlaziya kuhlelwe ngokwezinjongo ezintathu ezibalulekile. Ukulinganiswa kwe-Econometric kwenziwa kusetshenziswa indlela yezikhathi yezinyathelo ezimbili ezijwayelekile (SGMM), kuhambisana namasu e-panel e-dynamic threshold ukuze ithwebule okungeyona imigqa. Ihloso yokuqala yokwenza uhlolo, imiphumela yemali yangaphandle ezimweni ze-ecosystem, kanye nendima yokulinganisa ikhwalithi yesikhungo ebudlelwaneni be-capital-ecosystem yangaphandle. Ukwakhela phezu kwalokhu, inhloso yesibili ukuhlola indima yokulinganisa izikhungo zezombusazwe ebudlelwaneni phakathi kwesikhungo nezombusazwe ebudlelwaneni kwesikhungo sezomnotho nezimo ze-ecosystem. Inhloso yesithathu ukuhlola umthelela wezimali zakwamanye amazwe ushitsha kanjani ekuvikeleleni ukudla. Okutholakele kunikeza iminingwane eminingana ebalulekile.

Okokuqala, okutholakele kubonisa ukuthi umthelela wezinkomba zemali yangaphandle, njengesikweletu sagaphandle, izimali ezamukelwayo, utshalomali oluqondile lwangaphandle kanye nokutshalwa kwezimali kwe-portfolio, ezimweni ze-ecosystem zigqama kakhulu ngaphezu kwemikhawulo ekhonjiwe. Lemikhawulo ikhombisa ukuthi, ngale kwamazinga athile, imali engenayo yamazwe angaphandle inegalelo elibonakalayo ekuthuthukisweni kweecostsyem. Okwesibili, ukuhlaziya kukhombisa ukuthi izikhungo eziqinile zezepolitiki nezomnotho zithuthukisa kakhulu uguquko lwe-ecosystem, egqamisa ukubaluleka kwekhalithi yokubusa. Okwesithathu, okutholakele kukhombisa okuthalakele kukhombisa ukuthi umthelela onemibandlela wemali yangaphandle ekuvikelekeni kokudla kuba kuhle uma wengamela ubudlelwane nezinjongo. Loku kuphakamisa ukuthi, nakuba umthelela ongenamibandela wemali yakwamanye amazwe ekuvikelekeni kokudla mubi, ubudlelwano obusebenzayo bungawuhlehlisa lomphumela futhi uqinise ukuvikeleka kokudla. Ucwaningo lunweba I-theory yesimanje yezemvelo ngokukhombisa ukuthi imali yamanye amazwe ingasekela kanjani ekusimameni kwe-ecosystem kanye nokuvikeleka kokudla e-Afrika. Ngokusekela okutholakele, Kunconywa ukuthi kwenziwe uguquko lwezimali zakwamanye amazwe ngendlela ezothuthukisa ukusimama kwe-ecosystem kanye nokuxhaswa ngezimali kokutholakala kokudla e-Afrika. Lolucwaningo lunegalelo langempela ngokuxhumanisa imali yakwamanye amazwe nezimo ze-ecosystem kanye nokuvikeleka kokudla e-Afrika.

Esikhathini esingangetjhumi leminyaka edlulileko, ikhontinenti ye-Afrika bekade ithembele khulu ekungeneni kwemali yangaphandle ukuthuthukisa umnotho; nofana kunjalo, ukutshwenyeka kuragela phambili mayelana nemiphumela yokuvikeleka kwebhoduluko nokudla ebujameni ebusengozini. Nalokha imali yangaphandle ingaragisela phambili ukuwohloka kwebhoduluko nofana isekele ukutjhuguluka kwemvelo, ubufakazi obubonakalakho busese buncani, khulukhulu e-Afrika. Ngaphezulu kwalokho, ziimbalwa iimfundo ezenze irhubhululo lokobana amaziko nokubambisana okunqophene nemiNqopho yokuThuthuka okuNzinzileko kunamuphi umthelela ebudlelwaneni lobu. Ngalokho-ke, kunesikhala sethiyori nobufakazi mayelana neendima zokulinganisa ikhwalithi yamaziko nokubambisana ekubumbeni imiphumela yokuvikeleka kwebhoduluko nokudla okulethwa yimali yangaphandle e-Afrika. Ithisisi le ihlolisisa umthelela wemali yangaphandle ebujameni behlelo lemvelo, ngokutjhejisisa indima yokulinganisa ikhwalithi yamaziko e-Afrika. Ihlolisisa nokobana imali yangaphandle inamuphi umthelela ekuvikelekeni kokudla lokha nayilawulwa budlelwana bemiNqopho le. Ukuhlaziya kwakhiwe ngokuqala iminqopho emithathu, kufakwa isikhathi ukusukela ngomnyaka we-2000 ukuya kowe-2022. Ukulinganiswa komnotho kwenziwe ngokusebenzisa ihlelo elinamagadango amabili le-SGMM, ngokurhelejwa mathekhniki wephaneli yomkhawulo enamandla ukubona ukungalingani. Umnqopho wokuthoma bekukuhlola umthelela wemali yangaphandle ebujameni behlelo lemvelo, kunye nendima yekhwalithi yamaziko yokulawula ubudlelwana bemali yangaphandle nehlelo lemvelo. Ngokwakhela phezulu kwalokhu, umnqopho wesibili bekukuhlahluba indima yamaziko wezepolitiki ekulawuleni ubudlelwana phakathi kwamaziko wezomnotho nobujamo behlelo lemvelo. Umnqopho wesithathu bekukuhlahluba umthelela wemali yangaphandle ekutjhugulukeni kweviveleko lokudla lokha nalisame ebudlelwaneni bemiNqopho ehlosiweko. Imiphumela inikela ngelwazi eliqakathekileko elinengana. Kokuthoma, imiphumela itjengisa bonyana iinkomba zomthelela wemali yangaphandle, njengeenkolodo zangaphandle, ukuthunyelwa kwemali, isisomali yangaphandle ebunqopha nesisomali yephothofoliyo, ebujameni behlelo lemvelo ubonakala khulu ukudlula imikhawulo ebekiweko. Imikhawulo le itjengisa bonyana, ngale kwamazinga athileko, ukungena kwemali yangaphandle kuyasiza ekuthuthukiseni ihlelo lemvelo. Kwesibili, imiphumela le itjengisa bonyana amaziko wezepolitiki newezomnotho aqinileko athuthukisa ukutjhuguluka kwehlelo lemvelo, kuveze ukuqakatheka kwekhwalithi yokubusa. Kwesithathu, imiphumela le itjengisa bonyana umthelela onemibandela wemali yangaphandle ekuvikelekeni kokudla uba ngomuhle lokha nawulawulwa budlelwana bemiNqopho ehlosiweko. Lokhu kuveza bonyana, nanyana umthelela onganamibandela wemali yangaphandle ekuvikelekeni kokudla ungaba ngomumbi, ukubambisana kungawubuyisela emuva umphumela lo begodu kuqinise nevikeleko lokudla. Irhubhululo leli linabisa ithiyori ye-mordenisation yehlelo lemvelo ngokutjengisa bonyana imali yamazwe wangaphandle ingakusekela njani ukunzinza kwehlelo lemvelo nevikeleko lokudla e- Afrika. Ngokusekelwa miphumela yerhubhululo leli, kuphakanyiswa bonyana amatjhuguluko wezangaphandle enziwe ngendlela ezakuthuthukisa ukunzinza kwehlelo lemvelo nesekelomali levikeleko lokudla e-Afrika. Irhubhululo leli lenza umnikelo wokuthoma ngokuhlanganisa imali yangaphandle nobujamo behlelo lemvele kunye nevikeleko lokudla e-Afrika.