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The Impact of Foreign Direct Investment (FDI) on Economic Growth in Eastern Africa: Evidence from Panel Data Analysis

Applied Economics and Finance

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Title The Impact of Foreign Direct Investment (FDI) on Economic Growth in Eastern Africa: Evidence from Panel Data Analysis
 
Creator Zekarias, Seiko Minota
 
Description This study has analyzed the impact of Foreign Direct Investment (FDI) on Economic growth in 14 Eastern Africa countries by employing 34 years (1980-2013) panel data, using dynamic GMM estimators after checking for autocorrelation and model specification tests. Developing countries have been attracting FDI attempting to reduce resource gaps, technology gap, unemployment and trade deficits. However, unlike classical growth theories, the empirical studies sought inconclusive effect of FDI on growth. The findings confirm that FDI has positive and marginally significant effect of FDI on economic growth, the rate of economic conditional convergence at 5%, absence of significant crowding out effect moving from FDI to domestic investment, interdependence of domestic investment and trade openness in the sub-region. Thus, I conclude that FDI is a key deriver of economic growth and a catalyst to economic conditional convergence in Eastern Africa; so, the subregion need to attract more FDI by improving investment environment, strengthening regional integration, developing human capital and basic infrastructure, and promoting export-oriented investment.
 
Publisher Redfame Publishing
 
Contributor —
 
Date 2016-01-20
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://redfame.com/journal/index.php/aef/article/view/1317
10.11114/aef.v3i1.1317
 
Source Applied Economics and Finance; Vol 3, No 1 (2016); 145-160
2332-7308
2332-7294
 
Language eng
 
Relation http://redfame.com/journal/index.php/aef/article/view/1317/1330