The Effect of Foreign Direct Investment and Trade Openness on Economic Growth: Evidence from Five African Countries

Haggai Chibale Chibalamula, Yeboah Evans, Mukuka Kachelo and Dastan Bamwesigye

AGRIS on-line Papers in Economics and Informatics, 2023, vol. 15, issue 01

Abstract: Through some empirical studies, the flow of FDI and trade openness have proven to support economic growth in developing countries. This paper examines the significance of FDI and trade openness in five African countries (Ghana, Morocco, Kenya, Uganda, and Zambia). The study employed the panel data analysis method using data from the World Bank for the period 1994-2019 for the five selected countries. The result from the Random effect model indicated that FDI positively supports growth, whereas trade openness harms economic growth in these countries. The outcome further revealed that Uganda enjoys more significance than the other countries using the countries' dummies through the pooled model estimation. We recommend that various governments focus more on exports, reduce imports, attract more FDI through incentives, and create a regulatory environment that is friendly to FDI.

Keywords: Agricultural Finance; Financial Economics; Political Economy (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aolpei:334657

DOI: 10.22004/ag.econ.334657

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