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Foreign direct investment and economic growth in Africa: a comparative analysis

Author

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  • Olawumi D. Awolusi
  • Olufemi P. Adeyeye
  • Theuns G. Pelser

Abstract

This paper investigates the effect of foreign direct investment on economic growth in selected African economies (South Africa, Nigeria, Egypt, Kenya, and Central African Republic) from 1980 to 2014, using a modified growth model by Agrawal and Khan (2011). The paper examines how country-specific factors can explain variations in the growth benefits of FDI. Ordinary least squares (OLS) and dynamic panel estimation were used as the estimation techniques. The only unusual results of the study were the inability of gross capital formation, human capital, and international technology in the Central African Republic to influence economic growth. In general, the impact of FDI on economic growth in African countries is limited or negligible for both OLS and dynamic panel estimations. The findings also revealed that South Africa's growth is more affected by FDI than in Nigeria, Egypt, Kenya, and Central African Republic. The paper therefore finds that government policies on FDI play significant roles in facilitating improved economic growth in African countries during the study period.

Suggested Citation

  • Olawumi D. Awolusi & Olufemi P. Adeyeye & Theuns G. Pelser, 2017. "Foreign direct investment and economic growth in Africa: a comparative analysis," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 9(3), pages 183-198.
    • Handle: RePEc:ids:ijsuse:v:9:y:2017:i:3:p:183-198
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    Citations

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    Cited by:

    1. Manasseh Charles O. & Nwakoby Ifeoma C. & Okanya Ogochukwu C. & Ifediora Chuka U. & Nzidee Williams A., 2023. "The Impact of Foreign Direct Investment and Oil Revenue on Economic Growth in Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 33(3), pages 61-85, September.
    2. Larissa Batrancea & Malar Mozhi Rathnaswamy & Ioan Batrancea, 2021. "A Panel Data Analysis of Economic Growth Determinants in 34 African Countries," JRFM, MDPI, vol. 14(6), pages 1-15, June.
    3. Pavitra Dhamija, 2020. "Economic Development and South Africa: 25 Years Analysis (1994 to 2019)," South African Journal of Economics, Economic Society of South Africa, vol. 88(3), pages 298-322, September.
    4. Clement Mintah & Mohamed Gabir & Felicia Aloo & Elvis Kwame Ofori, 2022. "Do business records management affect business growth?," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-21, March.
    5. Jasnine MOGEM KOUAM & Luc NEMBOT NDEFFO & Mathurin Aimé MEKAM POUATCHA, 2020. "Foreign Direct Investment-Trade nexus in sub-Saharan Africa: Does the institutional quality matter?," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 5-14.
    6. Ethel Ansaah Addae & Dongying Sun & Olivier Joseph Abban, 2023. "Evaluating the effect of urbanization and foreign direct investment on water use efficiency in West Africa: application of the dynamic slacks-based model and the common correlated effects mean group e," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 5867-5897, July.

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