Does Absorptive Capacity Matter in the Impact of Immigration on Innovation in Africa? Evidence from Panel Quantile Regression with Nonadditive fixed Effects

Abstract

This study aims to assess the role of absorptive capacity in the relationship between immigration and domestic innovation in sending countries using five average period data points from a sample of 35 African countries over the period 1995-2019. The results based on panel quantile regression with nonadditive fixed effects support the brain drain hypothesis, implying that immigration has negative heterogeneous effects on the innovation performance of sending countries. Our findings also revealed that absorptive capacity mitigates the negative effects of immigration when countries’ absorptive capacity reaches a certain threshold. These results suggest that strengthening the quality of institutions and physical infrastructures could mitigate the brain drain effect of immigration in Africa.