ECONOMIC GROWTH IN AFRICA: DOES FOREIGN DIRECT INVESTMENT STILL MATTER?

Abstract

The contribution of foreign direct investment to the development of economy cannot be overemphasized, as it has been considered to play a vital role in promoting rapid growth and development of the developing economies. This paper examined whether FDI has contributed to economic growth in African countries over the period of 2000 to 2015, with the proper utilization of panel data estimation technique on the annual country data obtained from World Development Indicators (WDI) 2016 and Worldwide Governance Indicators (WGI) 2016. The results reveals that some important variables such as coefficients (estimated parameters) of trade openness, rule of law, political stability, capital formation and population positively determined economic growth in Africa, While those of FDI and inflation were found to have negative impact on economic growth. The study then recommends amongst others formulation and implementation of policies that attract FDI inflow in the continents.