Re-examine foreign direct investment and economic growth: Panel co-integration and causality tests for sub-Saharan African countries

Taiwo Akinlo and Simon-Oke O. Olayemi
Additional contact information
Simon-Oke O. Olayemi: Federal University of Technology Akure, Ondo State Nigeria

International Area Studies Review, 2015, vol. 18, issue 1, 73-86

Abstract: This study examines the causal relationship between foreign direct investment and economic growth in sub-Saharan Africa from the period 1995–2011. The study uses annual data for a panel of 30 sub-Saharan Africa Countries. We test for Granger causality in heterogeneous panels by testing first for Homogeneous Non-Causality and Homogeneous Causality hypotheses. The non-homogeneous test, which tests the hypothesis that gross domestic product (GDP) does not Granger-cause foreign direct investment and foreign direct investment does not Granger-cause GDP, is rejected, and it is also shown that there is bidirectional causality between economic growth and insurance in sub-Saharan Africa. The homogeneous causality tests, which test the hypothesis that GDP Granger-causes foreign direct investment and foreign direct investment Granger-causes GDP, are accepted. It is also shown that causality is homogeneous across all members of the panel.

Keywords: Causality; economic growth; foreign direct investment; sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: C13 F01 F35 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/2233865914554469 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:intare:v:18:y:2015:i:1:p:73-86

DOI: 10.1177/2233865914554469

Access Statistics for this article

More articles in International Area Studies Review from Center for International Area Studies, Hankuk University of Foreign Studies
Bibliographic data for series maintained by SAGE Publications ().