The effects of FDI on economic growth in Africa

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.

Identifiers

DOI

10.1080/09638199.2022.2079709

Citations and references