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Foreign direct investment and economic growth in Zimbabwe: a dynamic causality test

Author

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  • Kunofiwa Tsaurai
  • Nicholas M. Odhiambo

Abstract

In this study we examine the dynamic causal relationship between foreign direct investment (FDI) and economic growth in Zimbabwe using the modern time-series techniques. Specifically, we employ the ARDL-bounds testing approach to examine the FDI-growth linkage. We also employ the error-correction-based causality test, which captures both the short run and long run dynamics. Contrary to some of the previous studies, this study shows that there is a distinct causal flow from economic growth to FDI in Zimbabwe. The results apply irrespective of whether the causality test is conducted in the short run or in the long run. The study, therefore, recommends that Zimbabwe should pursue pro-growth strategies, in order to promote foreign direct investment.

Suggested Citation

  • Kunofiwa Tsaurai & Nicholas M. Odhiambo, 2012. "Foreign direct investment and economic growth in Zimbabwe: a dynamic causality test," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 5(2), pages 183-196.
    • Handle: RePEc:ids:ijepee:v:5:y:2012:i:2:p:183-196
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    Citations

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    Cited by:

    1. N.M. Odhiambo, 2022. "Does Foreign Direct Investment Spur Economic Growth? New Empirical Evidence from Sub-Saharan African Countries," Working Papers AESRI-2022-20, African Economic and Social Research Institute (AESRI), revised Jul 2022.
    2. Alexander Maune, 2018. "The Impact of FDI Inflows, Exports and Domestic Investment on Economic Growth in Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 10(4), pages 152-164.
    3. Kudakwashe, Chinyanganya & Regret, Sunge, 2021. "Growth Effects of Foreign Direct Investments in Zimbabwe: Do Sources Matter?," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.
    4. Nicholas M. Odhiambo, 2022. "Does Foreign Direct Investment Spur Economic Growth? New Empirical Evidence From Sub-Saharan African Countries," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(233), pages 61-84, April – J.
    5. Nicholas M. Odhiambo, 2022. "Foreign Direct Investment and Economic Growth in Kenya: An Empirical Investigation," International Journal of Public Administration, Taylor & Francis Journals, vol. 45(8), pages 620-631, June.

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