Title:
FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN SUB SAHARAN AFRICA: DO INSTITUTIONS AND HUMAN CAPITAL MATTER?

Authors:
John Mutenyo (PhD) , Prof. Nehemiah Osoro, James Muwanga (PhD), John Mayanja Bbale (PhD)

Volume - 2 Issue - 5, Pages - 3461-3489

Abstract:
This paper assesses the impact of Foreign Direct Investment (FDI) on economic growth in 31 sub-Saharan African countries. Different from previous studies, the paper attempts to uncover the channels through which FDI impacts on growth. The empirical results are motivated by an endogenous growth model in which FDI is considered as one of the major determinants of growth. Due to the endogeniety between FDI and growth, the paper uses a dynamic panel model in its analysis, hence uses the GMM estimator to obtain consistent and efficient estimates of the impact of FDI on economic growth. There is consistent finding that FDI has no direct impact on economic growth of the selected sample of SSA countries, but it has indirect impact on growth via human capital development and financial development. When the sample is subdivided into "resource-rich" and "resource-poor" countries, the findings showed that FDI positively impacts on growth through human capital and infrastructural developments, among the resource-rich SSA countries, while in the resource-poor its impact is via good governance and bureaucratic quality.

Cite this Article:

[Mutenyo, John, Nehemiah Osoro, Prof., James Muwanga, and John Mayanja Bbale. "FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN SUB SAHARAN AFRICA: DO INSTITUTIONS AND HUMAN CAPITAL MATTER?" International Journal of Social Science & Economic Research 2.5 (2017): 3461-489.]