2002) (Fig. 5.7). Similar to FDI, countries that actively promote access to health and
infrastructure (e.g. lighting, electricity, roads to access the targeted areas), and take
steps towards developing functional legal systems, are more favourably considered
when donors prioritize ODA-recipient countries. This is because such factors facilitate the effective implementation of ODA-funded projects. However, remote areas
are often overlooked (even if they are highly vulnerable and in need of ODA) due to
lack of infrastructure, secure and safe access and high delivery costs (Briggs 2018)
(Chap. 1 Vol. 1).
Some of the factors discussed above can either act as push or pull factors to attract
both FDI and ODA. Push factors drive capital flows from developed to developing
countries due to external circumstances that are beyond the control of recipient
countries, e.g. global economic growth, interest rates and investor risk aversion
(Opperman and Adjasi 2017; Anyanwu and Yameogo 2015). On the contrary, pull
factors reflect some of the characteristics of recipient countries, such as interest rates
for investments (Opperman and Adjasi 2017; Anyanwu and Yameogo 2015). Donor
intentions also positively or negatively influence ODA cycles (Fig. 5.7). At the same
time, the strategic and political influences of donors and the economic deficits and
political conditions in recipient countries, often determine the direction of ODA
(Alesina and Dollar 2000). ODA outcomes thus often depend on the characteristics
of the donors, their underlying motives/agendas and complementary policies
(Minasyan et al. 2017).
Lastly, the volatility of FDIs and ODA plays a significant role on the direction of
the cycles (Museru et al. 2014). The stability and predictability of ODA flows can
promote higher internal confidence and trust in recipient countries, having a positive
reinforcing effect on their ability to attract ODA (Dupasquier and Osakwe 2006).
Conversely, volatile and variable ODA inflows can create insecurity and affect the
internal circumstances in recipient countries, thus having a negative reinforcing
effect on their ability to attract ODA (Minasyan et al. 2017). This can cause the
diversion of financial resources directed towards research, science and technology,
for example, to more urgent and basic needs, thus taking a toll on long-term
economic development (Briggs 2018) (see Chap. 1 and 8 Vol. 1). Finally, largescale and prolonged ODA initiatives can increase the dependency of recipient
countries on foreign aid, which can lead to weak governance, institutions and
state-building capacity (Bräutigam and Knack 2014).
5.3.3 Pathways for the Transformation of FDI and ODA
Determinants
While the conceptual mapping outlined in Sect. 5.3.2 allows for the visualization of
recurrent concepts and relationships within the literature, the SNA shows the degree
centrality of these concepts (see below). Figure 5.8 outlines the frequency of
interactions between concepts or how these concepts are discussed at the same
time in the literature.
5 Determinants of Foreign Investment and International Aid for Meeting the. . .
173
infrastructure (e.g. lighting, electricity, roads to access the targeted areas), and take
steps towards developing functional legal systems, are more favourably considered
when donors prioritize ODA-recipient countries. This is because such factors facilitate the effective implementation of ODA-funded projects. However, remote areas
are often overlooked (even if they are highly vulnerable and in need of ODA) due to
lack of infrastructure, secure and safe access and high delivery costs (Briggs 2018)
(Chap. 1 Vol. 1).
Some of the factors discussed above can either act as push or pull factors to attract
both FDI and ODA. Push factors drive capital flows from developed to developing
countries due to external circumstances that are beyond the control of recipient
countries, e.g. global economic growth, interest rates and investor risk aversion
(Opperman and Adjasi 2017; Anyanwu and Yameogo 2015). On the contrary, pull
factors reflect some of the characteristics of recipient countries, such as interest rates
for investments (Opperman and Adjasi 2017; Anyanwu and Yameogo 2015). Donor
intentions also positively or negatively influence ODA cycles (Fig. 5.7). At the same
time, the strategic and political influences of donors and the economic deficits and
political conditions in recipient countries, often determine the direction of ODA
(Alesina and Dollar 2000). ODA outcomes thus often depend on the characteristics
of the donors, their underlying motives/agendas and complementary policies
(Minasyan et al. 2017).
Lastly, the volatility of FDIs and ODA plays a significant role on the direction of
the cycles (Museru et al. 2014). The stability and predictability of ODA flows can
promote higher internal confidence and trust in recipient countries, having a positive
reinforcing effect on their ability to attract ODA (Dupasquier and Osakwe 2006).
Conversely, volatile and variable ODA inflows can create insecurity and affect the
internal circumstances in recipient countries, thus having a negative reinforcing
effect on their ability to attract ODA (Minasyan et al. 2017). This can cause the
diversion of financial resources directed towards research, science and technology,
for example, to more urgent and basic needs, thus taking a toll on long-term
economic development (Briggs 2018) (see Chap. 1 and 8 Vol. 1). Finally, largescale and prolonged ODA initiatives can increase the dependency of recipient
countries on foreign aid, which can lead to weak governance, institutions and
state-building capacity (Bräutigam and Knack 2014).
5.3.3 Pathways for the Transformation of FDI and ODA
Determinants
While the conceptual mapping outlined in Sect. 5.3.2 allows for the visualization of
recurrent concepts and relationships within the literature, the SNA shows the degree
centrality of these concepts (see below). Figure 5.8 outlines the frequency of
interactions between concepts or how these concepts are discussed at the same
time in the literature.
5 Determinants of Foreign Investment and International Aid for Meeting the. . .
173