QUEST FOR SUSTAINABLE GROWTH, DOES FOREIGN DIRECT INVESTMENTSTILL MATTERS? EVIDENCE IN SOME SELECTED AFRICA COUNTRIES.

Abstract

The debate on the role of Foreign Direct Investment in promoting rapid growth and
development of the developing economies remain inconclusive. This paper examined
whether FDI still matters in Africa, with the proper utilization of panel data estimation
technique on the annual country data that were sourced from world Governance and
Development Indicators. Using random and fixed effect model, the results reveals that
some important variables such as coefficient of trade openness, rule of law, political
stability, capital formation and population positively determined economic growth in
Africa, accounting for about 2, 1, 65, 170, and 396.7 percent increase in economic
growth. While, FDI and inflation were found to have negative impact on economic
growth accounting for 21.4 and 2 percent fall in economic growth over the study period.
The study then recommends amongst others formulation and implementation of policies
that encourage domestic investment in the continents.