The Moderating Effect of Economic Growth on the Relationship between Economic Integration and Foreign Direct Investment in the East African Community
J.L. Lishenga and
Journal of Finance and Investment Analysis, 2017, vol. 6, issue 3, 4
This paper investigates the moderating effect of economic growth on theÂ relationship between economic integration and foreign direct investment in theÂ East African Community. Developing countries rely on foreign direct investmentÂ (FDI) to supplement their low levels of national savings in order to promoteÂ economic development. However, low levels of FDI are still a big concern forÂ poor countries. Regional integration is often considered a means to improveÂ member countriesâ€™ attractiveness to FDI. From the available anecdotal evidence,Â the East African region ranks as one of the poorest recipients of FDI in the world.Â Finance literature records that economic growth as an indicator of the investorÂ potential rate of return as well as population purchasing power catalyzes the rateÂ of foreign direct investment attraction. The research employed an explanatoryÂ research design. East African Community was the unit of analysis involvingÂ Kenya, Tanzania, Uganda, Rwanda and Burundi. Empirical data analysisÂ employed hierarchical regression analysis. The quarterly time series data usedÂ spanned the period 2001 â€“ 2015. The study establishes that economic growthÂ enhances the capacity of economic integration to attract FDI into a region.JEL classification numbers: F30, P45Keywords: Economic integration, Economic growth, Moderation, Foreign directÂ investment, East African Community
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Persistent link: https://EconPapers.repec.org/RePEc:spt:fininv:v:6:y:2017:i:3:f:6_3_4
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