The Impact of Foreign Capital Inflows, Infrastructure and Role of Institutions on Economic Growth: An Error Correction Model

Hammed Oluwaseyi Musibau (), Suraya Mahmood and Hammed Yusuf

Academic Journal of Economic Studies, 2017, vol. 3, issue 4, 35-49

Abstract: This study investigates the impact of foreign capital inflows, corruption, and infrastructure on economic growth among ECOWAS members over the period 1980 to 2016. We adopt the Two-Gap model and using ECM method. The empirical results revealed long run causality between the explanatory variables and growth. And also there are short run causality between FCI, infrastructure and corruption on growth but Political stability does not cause growth in short run. Findings of the study also established a negative relationship between FDI, Infrastructure and real growth while ODA, corruption, political stability have positive impact on real growth among ECOWAS members. We recommend policy across the ECOWAS countries that will attract foreign capital inflow. The policy makers should look inwards, re-strategize and begin to formulate and implement sound and credible economic policies that will be aimed at attracting productive capital inflows into the region.

Keywords: Foreign capital flows; infrastructure; institutions; economic growth; ECM (search for similar items in EconPapers)
JEL-codes: F43 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:khe:scajes:v:3:y:2017:i:4:p:35-49

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