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The Impact of Asian Foreign Direct Investment, Trade on Africas Economic Growth

Author

Listed:
  • Diouf Modou

    (Huazhong University of Science and Technology, P.R. China)

  • Hai Yun Liu

    (Huazhong University of Science and Technology, P.R. China)

Abstract

Globalization of capital and especially foreign direct investment (FDI) and trade has increased dramatically over the past decades. In developing economies; FDI has become the most stable and largest component of capital flows. This study examines the interaction between FDI, trade openness and economic growth with a focus on Asian FDI, trade and 13 West African countries for the period 1980-2015. The results from weighted Fully Modified Ordinary Least Squares (FMOLS) show that both FDI and trade significantly contribute to economic growth. The study also indicates that a unidirectional causality runs from FDI to economic growth indicating FDI-growth-led hypothesis while a bidirectional causality is detected between trade and economic growth validating feedback-effect. Increasing FDI could also promote trade by opening and expanding market opportunities.

Suggested Citation

  • Diouf Modou & Hai Yun Liu, 2017. "The Impact of Asian Foreign Direct Investment, Trade on Africas Economic Growth," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 3(1), pages 72-85, April.
    • Handle: RePEc:mgs:ijoied:v:3:y:2017:i:1:p:72-85
    DOI: 10.18775/ijied.1849-7551-7020.2015.31.2004
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    Citations

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    Cited by:

    1. Nita Rudra & Meir Alkon & Siddharth Joshi, 2018. "FDI, Poverty, and the Politics of Potable Water Access," Economics and Politics, Wiley Blackwell, vol. 30(3), pages 366-393, November.
    2. Andy Titus Okwu & Isiaq Olasunkanmi Oseni & Rowland Tochukwu Obiakor, 2020. "Does Foreign Direct Investment Enhance Economic Growth? Evidence from 30 Leading Global Economies," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 12(2), pages 217-230, May.
    3. Daniel Lim & Michael Groschek, 2021. "Public Debt and Economic Growth in Switzerland," Journal of Contemporary Research in Business, Economics and Finance, Learning Gate, vol. 3(2), pages 39-47.
    4. Vathanak Chet, 2022. "The Impacts of FDI, ODA, and LS on Gross Domestic Product in Cambodia: A Comparative Analysis," Technium Social Sciences Journal, Technium Science, vol. 29(1), pages 259-270, March.

    More about this item

    Keywords

    FDI; Trade; Economic growth; Asian countries; African countries.;
    All these keywords.

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General

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