The Impact of Asian Foreign Direct Investment, Trade on Africas Economic Growth

Diouf Modou and Hai Yun Liu
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Diouf Modou: Huazhong University of Science and Technology, P.R. China
Hai Yun Liu: Huazhong University of Science and Technology, P.R. China

International Journal of Innovation and Economic Development, 2017, vol. 3, issue 1, 72-85

Abstract: Globalization of capital and especially foreign direct investment (FDI) and trade has increased dramatically over the past decades. In developing economies; FDI has become the most stable and largest component of capital flows. This study examines the interaction between FDI, trade openness and economic growth with a focus on Asian FDI, trade and 13 West African countries for the period 1980-2015. The results from weighted Fully Modified Ordinary Least Squares (FMOLS) show that both FDI and trade significantly contribute to economic growth. The study also indicates that a unidirectional causality runs from FDI to economic growth indicating FDI-growth-led hypothesis while a bidirectional causality is detected between trade and economic growth validating feedback-effect. Increasing FDI could also promote trade by opening and expanding market opportunities.

Keywords: FDI; Trade; Economic growth; Asian countries; African countries. (search for similar items in EconPapers)
JEL-codes: M00 (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:mgs:ijoied:v:3:y:2017:i:1:p:72-85

DOI: 10.18775/ijied.1849-7551-7020.2015.31.2004

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