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The Impact of Foreign Capital Inflows, Infrastructure and Role of Institutions on Economic Growth: An Error Correction Model

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  • Hammed Oluwaseyi Musibau

    ()

  • Suraya Mahmood
  • Agboola Yusuf Hammed

Abstract

This study investigates the impact of foreign capital inflows, corruption, and infrastructure on economic growth among ECOWAS members over the period 1980 to 2016. We adopt the Two-Gap model and using ECM method. The empirical results revealed long run causality between the explanatory variables and growth. And also there are short run causality between FCI, infrastructure and corruption on growth but Political stability does not cause growth in short run. Findings of the study also established a negative relationship between FDI, Infrastructure and real growth while ODA, corruption, political stability have positive impact on real growth among ECOWAS members. We recommend policy across the ECOWAS countries that will attract foreign capital inflow. The policy makers should look inwards, re-strategize and begin to formulate and implement sound and credible economic policies that will be aimed at attracting productive capital inflows into the region.

Suggested Citation

  • Hammed Oluwaseyi Musibau & Suraya Mahmood & Agboola Yusuf Hammed, 2017. "The Impact of Foreign Capital Inflows, Infrastructure and Role of Institutions on Economic Growth: An Error Correction Model," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(4), pages 35-49, December.
  • Handle: RePEc:khe:scajes:v:3:y:2017:i:4:p:35-49
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    References listed on IDEAS

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    Cited by:

    1. Olunkwa Chidi Ndubuisi & Shobande Olatunji Abdul, 2018. "Capital Flow Components and Industrial Sector Performance in Nigeria," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 48-57, July.

    More about this item

    Keywords

    Foreign capital flows; infrastructure; institutions; economic growth; ECM;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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