Replication Data and Code: Absorptive Capacity, Exchange-Rate Regimes, and the Growth Effects of Foreign Direct Investment — Threshold Evidence from 115 Developing Economies

This repository contains the replication dataset and Stata do-files for the paper "Absorptive Capacity, Exchange-Rate Regimes, and the Growth Effects of Foreign Direct Investment: Threshold Evidence from 115 Developing Economies." Using Hansen's (1999) panel threshold regression (xthreg, Stata), the study examines whether the growth effect of foreign direct investment (FDI) is regime-dependent across 115 developing economies in Sub-Saharan Africa (47), Asia (38), and Latin America (30) over 1970–2023. The analysis identifies region-specific FDI thresholds (SSA: 0.82% of GDP; Latin America: 1.15%; Asia: 1.27%) below and above which FDI's effect on real GDP per capita growth reverses sign. Within SSA, the paper further shows that Francophone (CFA franc zone) economies are shielded from the below-threshold growth penalty that afflicts Anglophone economies, pointing to exchange-rate regime as a conditioning channel. Contents: Panel dataset (1970–2023) covering 115 countries, sourced from World Bank WDI, IMF International Financial Statistics, Penn World Tables (PWT 10.0), UNCTAD, and Worldwide Governance Indicators (WGI) Variable construction files (FDI winsorization, terms-of-trade volatility, institutional quality indices, log-transformed controls) Stata do-files implementing Hansen (1999) panel threshold regression via xthreg Robustness-check code: bootstrap inference, temporal aggregation (3-/5-year averages), IV-FE (2SLS, xtivreg2) using US Federal Funds Rate and World Bank Primary Commodity Price Index as instruments, and system GMM (xtabond2, Blundell & Bond 1998) Anglophone/Francophone SSA disaggregation files Keywords: foreign direct investment; capital flows; exchange rate regimes; threshold effects; absorptive capacity; Sub-Saharan Africa; Hansen panel threshold regression License: CC BY 4.0