Foreign Direct Investment, Infrastructure Development and Economic Growth in African Economies

Godfrey Marozva () and Patricia Lindelwa Makoni ()
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Godfrey Marozva: University of South Africa
Patricia Lindelwa Makoni: University of South Africa

Acta Universitatis Danubius. OEconomica, 2018, issue 14(6), 90-102

Abstract: The primary objective of this study was to explore the relationship between FDI, infrastructural development and economic growth using a panel of nine African countries, over the period 2009 -2016. There is no single economic theory, which explains the effect of infrastructure on economic growth. Using panel data analysis the results from Fixed Effects model show that economic growth is positively related to both infrastructure development and FDI. However, the relationship is not significant. Furthermore, government spending and domestic credit to the private sector are positively related to economic growth and the relationship is significant. It is therefore recommended that the Governments of these African countries intervene and put policies in place to develop their local infrastructure so that it can further grow its economy, thereby increasing employment and trade opportunities, especially if it wishes to attract foreign investors. Also, African countries are encouraged to put in place polices that promotes political stability, property rights, human rights and rule of law in order to attract FDI.

Keywords: FDI; Infrastructure; economic growth; principal component analysis; Africa (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:dug:actaec:y:2018:i:6:p:90-102

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