Foreign direct investment, regulations and growth in sub-Saharan Africa

Samuel Adams, Eric Evans Osei Opoku

Research output: Journal PublicationArticlepeer-review

50 Citations (Scopus)

Abstract

This paper examines the effect of foreign direct investment (FDI) on economic growth and determines how the regulatory regime of the countries affects the FDI-growth relationship for 22 sub-Saharan African countries for the period 1980-2011. Using General Methods of Moments (GMM) estimation technique, the findings of the study show that both FDI and regulations (total regulations, credit market regulations, business regulations and labor market regulations) do not have an independent significant effect, however, their interaction has a significant positive effect on economic growth. This implies that the growth effect of FDI is stimulated in the presence of effective and quality regulations. Therefore measures have to be put in place to strengthen regulations in sub-Saharan Africa in order to realize the benefits of FDI.

Original languageEnglish
Pages (from-to)48-56
Number of pages9
JournalEconomic Analysis and Policy
Volume47
DOIs
Publication statusPublished - 1 Sep 2015
Externally publishedYes

Keywords

  • Economic growth
  • Foreign direct investment
  • Generalized Method of Moments
  • Regulations
  • Sub-Saharan Africa

ASJC Scopus subject areas

  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)

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