The Impact of Foreign Direct Investment (FDI) on Economic Growth: A Comparative Study of East and Central Africa.

Abstract

This study analyzes the impact of foreign direct investment (FDI) on economic growth in East and Central Africa between 2000 and 2015. A sample of 24 countries made up of 16 from East Africa and 8 from Central Africa were considered. Data was obtained from World Bank Development Indicators and World Governing Indicators. I employed the pooled Ordinary Least Square (OLS) regression and panel data econometric techniques for the estimations and the findings revealed that FDI positively impacts economic growth in East Africa. Conversely, no impact of FDI on economic growth was found for Central Africa. Other significant factors that impact economic growth from the findings are the level of governance and inflation. The findings from the study suggest that policies aimed at attracting FDI should be embarked on by governments in Central Africa to help improve the inflows of FDI into the region.