The effects of FDI on economic growth in Africa. Issue 1 (2nd January 2023)

• Record Type: Journal Article
• Authors: Yimer, Addis
• Is Part Of: Journal of international trade & economic development. Volume 32:Issue 1(2023)
• Page Start: 2
• Page End: 36
• Publication Date: 2023-01-02
• Subjects: FDI -- economic growth -- country classification -- institutions -- political stability -- Africa; C23 -- F21 -- F43 -- O55; International trade -- Periodicals; Economic development -- Periodicals; 337
• DOI: 10.1080/09638199.2022.2079709
• Languages: English
• ISSNs: 0963-8199

Abstract

Abstract : This paper investigates the growth effects of FDI in Africa for the period 1990–2016 using a dynamically common correlated effect approach for an error-correction model. It uses an analytical classification of African economies, with each being fragile, factor-driven or investment-driven. It also accounts for interaction effects and the problem of cross-sectional dependence that previous studies overlooked. While the long-run effect of FDI on growth is significantly positive in investment- and factor-driven economies, its short-run effect is insignificant in the latter type of economies. The effect of FDI on growth is insignificant in the fragile category both in the short-run and long-run, however.