In the era of economic globalization, international investment and trade have become more ubiquitous and profitable, becoming essential engines for stimulating global economic growth. Enhancing the competitiveness of marketable goods, promoting the development of industrial technology, reducing fund shortages in host countries, and optimizing the structure of foreign trade commodities are critical in boosting global trade [1
]. With the growing trend of international investment liberalization and the exponential rise of transnational investments [2
], the difficulties faced by transnational investors and host countries are becoming more and more complex. Transnational investors have limited understanding regarding the host country’s economic conditions, trade risks, market operation uncertainties, and government regulatory risks [4
], which could lead to difficulties in controlling investment costs and projecting prospects and profits and could eventually result in investment losses. Meanwhile, insufficient consideration is given by host countries towards improving the domestic investment environment, making it challenging to formulate reasonable and attractive foreign investment policies [5
]. As a result, critical opportunities in attracting investments and technical upgrades could be overlooked. Establishing a scientific investment potential evaluation index system becomes particularly important in determining investment orientation and avoiding investment risks [6
]. The static analysis of investment potential based on the entropy weight method (EWM), the grey correlation degree model (GCDM), factor analysis (FA), and data envelopment analysis (DEA) has percolated into the mainstream of current researches [7
]. However, this static analysis has largely evaded the impact of economic cycle changes, resulting in a lack of long-term reference for investment potential. Most scholars have used investment hotspots of Western Europe and North America as research objects and have paid little attention to the evolution of investment potential of other regions such as Africa, Latin America, and Southeast Asia in the context of economic globalization. Some scholars have established investment potential evaluation systems using fundamental indicators such as GDP and population size. However, these assessment systems have limited capacity to understand the impact of resource development, economic environment, open environment, entrepreneurial environment, and other development systems on investment potential. Establishing an evaluation index system that comprehensively reflects the investment potential is crucial in analyzing the evolution of investment potential of underdeveloped regions.
The investment potential and economic development have the coordination relation of mutual influence, mutual connection, and mutual restriction. The level of economic development of the host country provides an essential guarantee for the improvement of investment potential, which can influence the level of government investment in infrastructure construction, the living conditions of communities, and various market activities and can directly be related to the commercial space of transnational investment and operation. In the context of the relative stability of the international market environment, the global economy, and the political structure, the investment potential is positively related to the international investment in the country. This could have direct influence on the fixed capital accumulation of the host country, the choice of corporate layout, the modernization of the production management concept, and improvement of the technological level of the host country, providing the host country with a driving force needed for economic development. In the era of global trade, the failure to establish a suitable investment environment can lead to significant reduction in foreign capital investments, which is not conducive to the overall development of the domestic market economy and creates difficulties in guaranteeing a stable trend of economic growth. The lack of investment policies, foreign capital utilization, and management levels result in insufficient conversion of investment potential into economic development, which will subsequently have an adverse impact on the host country’s economic development and cross-border investment operations. Studies on the synergistic relationship between investment potential and economic development have highlighted the reference value for both the host country and transnational investors. At present, only a limited number of studies have been conducted regarding the relationship between investment potential and economic development [9
]. In contrast, the relationships between urbanization, economic development, ecological environment, and other subsystems have widely been investigated using the coupling degree model (CDM) and the coordination model (CM). Researchers have become inclined to use analytical techniques, such as trend surface analysis, the Markov chain model, and the standard deviation ellipse model, to study the temporal and spatial evolution characteristics of coordination relations [14
]. More recently, the use of GIS technology has provided new paths for analysis in this field [15
]. However, the internal driving mechanism of the coordination relationship and differentiation has been investigated sparingly, creating difficulties in providing refined and targeted support for policy and decision-makers. While scholars have done a lot of work in analyzing and comparing the strengths of the coordination relationship between regions, they have largely neglected to understand the effect of the lag attribute in the subsystem, which impedes the necessary adjustments to the national macroeconomic policies. Thus, more attention ought to be directed towards the classification and determination of coordination relationships and the driving mechanism of spatial distribution difference.
African countries were selected as the research subject in this study, as shown in Figure 1
. Since the start of the 21st century, Africa has gradually become a hotspot for global investments [16
]. In 2016, foreign direct investment (FDI) inflows in Africa reached US $
59.4 billion. FDI has become one of the essential catalysts driving African growth and development. The efficient reduction of investment risks and the adoption of appropriate investment policies have become principal concerns for African countries in the new era. With these in mind, this study is focused on answering three key questions: First, what are the investment potentials and economic trends among African countries? Second, what is the level of coordination relationship between the investment potential and economic development among African countries? And third, what are the significant factors affecting the differentiation in coordination degrees among countries?
In order to answer these research questions, we formulated the following specific objective for this study: (1) to identify the dynamic evolution trends of investment potential and economic development; (2) to specify the temporal and spatial classification attributes of the coordination relationship between investment potential and economic development; and (3) to explore the driving mechanism of spatio-temporal heterogeneity of the coordination relationship. In this study, we integrated the entropy weight method (EWM), the coupling coordination degree model (CCDM), exploratory spatial data analysis (ESDA), and other methods to examine the evolution characteristics of the coordination relationship between the investment potential and economic growth in African countries. Combined with the geographic detector (GD), geographically weighted regression (GWR), and other econometric methods, the driving mechanism of the coordination relationship between investment potential and economic development was analyzed. The findings and conclusion of this study can be used as a reference for transnational investors and help in supporting African nations in establishing a clear coordination relationship between investment potential and economic development.
4.1. Evaluation of Investment Potential and Economic Development
The investment potential and economic development level of Africa were measured using the entropy weight method, which shows that the average value of investment potential in 2016 was only 0.252, while the average value of economic development was only 0.151. This suggests that the current investment potential and economic development in Africa are still at low levels, consistent with findings from previous research [24
]. For most African countries, guiding the capital flow into infrastructure construction and social services and promoting sustained development in technical training, science and engineering education, and technology research should be considered as urgent national concerns.
Countries with smaller economies, such as Seychelles, Mauritius, and Botswana, have relatively high rankings in the evaluation index comparison, contrary to the finding of Xie et al. and Jiang et al. [25
]. This is mainly because the evaluation system used in this study employed a large number of mean indicators and ratio indicators, such as per capita cultivated land area and per capita GNI (gross national income). The rankings in the subsystem evaluation index for many countries are comparable with those from international reports such as the Doing Business Report and the World Investment Report (In 2016, Seychelles, Mauritius, and Botswana ranked the 99th, 20th, and 86th places in The World Investment Report). This supports the feasibility and rationale of the indicator selection approach.
4.2. The Evolution of the Coordinated Relationship between Investment Potential and Economic Development
Based on the coupling and coordination mechanisms between investment potential and economic development, we used the CCDM to analyze the coordination relationship between investment potential and economic development in Africa, which is an extension of the field of coordination relationship research [12
]. We divided the coordination relationship into three levels based on the coordination degree of each country, from coordinated development to uncoordinated development. As the value of the coordination degree decreases, so does the degree of mutual promotion between investment potential and economic development. This study has shown that barely coordinated development and uncoordinated development are the main forms of coordination relationship in Africa. Based on the analysis of evaluation indicators, this may be the result of inefficient government policies and management, shortage in technical skills and required competencies, and the high import dependence of many economies in Africa, which have hindered overall improvements in the business environment and economic development. This finding on the condition regarding the coordination relationships in African countries could be used to explain the current backwardness in investment potential and economic development found in much of the region. It also supports the feasibility and scientificity of using the CCDM to analyze the coordination relationship between investment potential and economic development.
The analysis of the subsystem shows that the dominant coordination relationship subtype was relative lag in economic development. This could be related to factors such as the instability in local politics, complex dynamics of international relations, and instability in the international exchange rate market. Individual countries would need to adjust the equilibrium relationship between investment potential and economic development to match the complexities of the international investment environment and satisfy the demands for economic development. The spatio-temporal pattern analysis suggests that the coordination degree has spatial agglomeration characteristics. This suggests that countries with high coordination degrees demonstrate driving effects, which can improve coordination relationships in the surrounding areas [29
]. Finally, based on the analysis of the coordination relationship classification, adopting policies that would effectively attract investment is crucial for many African countries in promoting the coordinated development of the national economy and investment environment.
4.3. The Driving Mechanism of the Coordinated Relationship between Investment Potential and Economic Development
When using the geographic detector in measuring the driving factors of coordination relationship, we found that the economic base level, residents’ living standard, information support level, industrial construction level, and business friendliness are the leading factors influencing coordination relationship, sorted by the value of their explanatory power. This suggests that in order to improve the coordination degree between investment potential and economic development, African countries would need to strengthen their economic base, use the “national wealth to benefit the masses”, support the development of the industrial system, and promote the democratization of internet use. In the geographically weighted regression analysis, we found significant spatial heterogeneity in the distribution of indicator influence. From high-value areas, the regression coefficients decreased gradually into low-value regions, indicating that these parameters are influenced by the spatial-neighbor effect and distance attenuation mechanism in forming different driving mechanisms. Also, driving mechanisms in adjacent areas have high similarity.
The driving factor analysis, combined with the geographic detector and geographical weighted regression method, provides more advantages in screening and detecting spatial heterogeneity of driving factors compared with previous approaches [30
]. The indicator rankings generated from different methods showed substantial similarity. For example, the economic base level and the residents’ living standards were the most important parameters found using geographically weighted regression and geographic detectors. This can be used to support the feasibility and reasoning of combining the methods in order to have a more comprehensive understanding of the driving mechanisms affecting investment potential and economic development.
4.4. Limitations of the Study
This study has some potential shortcomings. First, although the evaluation index system included a number of indicators, this does not guarantee that all significant variabilities have been considered in the indicator list. Some indicators of development, such as inflation, environmental phenomena, and poverty rates, were not considered. Likewise, the endogeneity issue between investment potential and economic development evaluation system could not be completely avoided. Second, because of limited research conducted with regards to the relationship between investment potential and economic development, our approach required some inevitable use of subjectivity from methodological choices to analysis framework. Third, the driving effect of geographical location, infrastructure development, and the economic integration between countries were not included in this study and would have to be explored in future studies. The research scope can also be extended to reflect the differences in the coordination relationship between investment potential and economic development within countries.
This study made use of data from 51 African countries, combining the entropy weight method, coupling coordination degree model, exploratory spatial data analysis, geographic detector, and geographically weighted regression model in order to analyze the evolution and driving mechanisms of the coordination relationship between investment potential and economic development. The following conclusions are drawn.
We found that the spatial distribution of high-level countries has strong similarities in terms of investment potential and economic development. The overall investment potential of African countries was found to be weak, but the internal differences in investment potential have gradually narrowed. The overall economic level is rising steadily, but the “economic gap” between countries is still very evident.
The coordinated relationship between investment potential and economic development can be divided into three categories: uncoordinated development, barely coordinated development, and coordinated development. Uncoordinated development and barely coordinated development were the most dominant types of coordinated relationship. By determining the lag conditions, countries can adopt unique strategies in order to attract foreign investments. The coordinated relationship between investment potential and economic development in African countries showcased attributes of spatial agglomeration. Hot spot areas were characterized by condensed and continuous distributions as the overall pattern while the local area had fragmented distributions; a hot spot agglomeration was found in Southern Africa. For cold spot areas, a spatial distribution pattern of “one core and one belt” was formed, with some Western African countries become part of the core area and some Central and Eastern African countries constituting the belt.
Economic base, residents’ living standard, industrial construction level, information support level, and business friendliness were the leading indicators in the relationship between investment potential and economic development. The distribution of regression coefficients showed distinct spatial heterogeneity. According to the distribution of regression coefficients in various countries, the driving mechanism of the coordination relationship can be divided into five types: economic base driven, industry-driven, information application-driven, business convenience-driven, and consumer market-driven.
Although this study has some shortcomings, such as constraints in the evaluation system, subjectivity of the methodological choices, and the absence of some parameters of driving factors, it serves as an essential reference for African countries to develop unique strategies and policies, in order to effectively attract inflows of foreign investments. In the context of economic globalization, African countries must actively optimize their investment potential, create a conducive business environment, and guide foreign investments towards areas according to the actual condition of their natural resource endowment, industrial advantages, industrial layout, and foreign trade direction. In particular, African countries must focus on improving the level of education and social security in order to make full use of Africa’s huge demographic dividend and rapid urbanization process in attracting foreign investments. Similarly, countries can also prioritize improving the utilization efficiency of foreign capital. Governments should implement effective domestic macroeconomic policies (e.g., low inflation monetary policies, low debt growth fiscal policies) and export-oriented trade strategies that can be competitive in the global economy. Strengthening economic cooperation between countries and avoiding the convergence of industrial structure are crucial in creating a conducive environment for market competition and improving the level of foreign capital utilization. These changes can provide the needed continued external support for African integration and sustainable development.