FDI as a contributing factor to economic growth in Burkina Faso: How true is this?

Zandile Zezethu () and Andrew Phiri
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Zandile Zezethu: Department of Economics, Nelson Mandela University

No 1823, Working Papers from Department of Economics, Nelson Mandela University

Abstract: Much emphasis has been placed on attracting FDI into Burkina Faso as a catalyst for improved economic growth within the economy. Against the lack of empirical evidence evaluating this claim, we use data collected from 1970 to 2017 to investigate the FDI-growth nexus for the country using the ARDL bounds cointegration analysis. Our empirical model is derived from endogenous growth theoretical framework in which FDI may have direct or spillover effects on economic growth via improved human capital development as well technological developments reflected in urbanization and improved export growth. Our findings fail to establish any direct or indirect effects of FDI on economic growth except for FDI’s positive interaction with export-oriented growth, albeit being constrained to the short-run. Therefore, in summing up our recommendations, political reforms and the building of stronger economic ties with the international community in order to raise investor confidence, which has been historically problematic, should be at the top of the agenda for policymakers in Burkina Faso.

Keywords: Per capita GDP; Convergence; unit root tests; nonlinearities; structural breaks; BRICS Emerging economies (search for similar items in EconPapers)
JEL-codes: C13 C32 C51 F21 O40 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2018-06
New Economics Papers: this item is included in nep-afr, nep-fdg and nep-int
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Working Paper: FDI as a contributing factor to economic growth in Burkina Faso: How true is this? (2018)
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