THE IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN SUB-SAHARAN AFRICA

Abstract

This paper examined the impact of foreign direct investment on economic growth in sub-Saharan Africa. The data used in the study was obtained from the World Bank Development Indication for the period, 1985-2017. Panel regression test was used for the analysis. The findings revealed that FDI had negative and significant impact on economic growth in SSA over the period cover by the study. Specifically, a 1 percent decrease in FDI as share of GDP reduces economic growth by 0.088. Exchange rate (EXR) and trade openness (OPN) exert positive and significant impact on economic growth in Sub-Sahara African. The study implies that FDI has not helped in the growth of sub-Sahara African economy. We recommend that governments of sub-Sahara African countries should make their environment conducive to foreign investors by tackling insecurity. The study further suggests that SSA countries should endeavor to attract domestic investment.