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Foreign direct investment inflow, volatility, and domestic investment in west Africa

Author

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  • P. B. Eregha

    (University of Lagos, Nigeria)

Abstract

This study empirically examined the effect of foreign direct investment inflow and its volatility on domestic investment in the ECOWAS region as FDI inflow is theoretical recognized as an important catalyst to bridge the Savings gap. The recent Panel Data Cointegration technique of estimation was employed in the study given the possibilities of panel data based studies to be associated with unit root problems as shown by experts in the methodology. Data for the study covered the period 1970-2008 and were extracted from the UN statistics data base and the World Development Indicator, 2009. The results of the empirical analysis revealed that foreign direct investment inflow substituted domestic investment in the West African region. FDI volatility was also found to hamper domestic investment in the region. From policy perspective, since most of the West African countries are faced with poor investment climate and low technical know on the part of the citizenry to harness the spillover effects of FDI inflow, it is therefore recommended that bolstering the investment climate and proper manpower training and development are vital to securing the gains from FDI inflow couple with efforts geared towards attracting FDI to manufacturing sector that is less prone to world price volatility.

Suggested Citation

  • P. B. Eregha, 2015. "Foreign direct investment inflow, volatility, and domestic investment in west Africa," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(2), pages 273-394, April-Jun.
    • Handle: RePEc:jda:journl:vol.49:year:2015:issue2:pp:273-294
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    File URL: http://muse.jhu.edu/journals/journal_of_developing_areas/v049/49.2.eregha.html
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    Cited by:

    1. Bruno Emmanuel Ongo Nkoa & Jacques Simon Song, 2017. "Analyse des effets de la qualité des institutions sur la volatilité des Investissements Directs Etrangers en Afrique," African Development Review, African Development Bank, vol. 29(4), pages 674-688, December.

    More about this item

    Keywords

    Foreign Direct Investment Inflow; Foreign Direct Investment Volatility; Domestic Investment and Panel Cointegration Technique;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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