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Foreign Direct Investment, Trade Openness and Economic Growth: A Panel Data Analysis for Sub-Saharan Africa

Author

Listed:
  • Cinar, Mehmet

    (Bursa Uludag University)

  • Nulambeh, Ndzembanteh Aboubakary

    (Bursa Uludag University)

Abstract

This paper examines the impact of foreign direct investment and trade openness on economic growth for 34 Sub-Saharan African countries. The methodology involves estimating the augmented endogenous growth model using panel data that runs from 2006 to 2015. The coefficients of the estimated REM model are statistically significant with all the signs compatible as expected. Our findings show that all the variables are significant in explaining SSA growth. Specifically, foreign direct investment and trade openness positively impact growth except inflation with a negative effect on growth. This study will assist the policy makers to increase effort towards the creation of favorable business climate that attract more foreign direct investment to SSA and enhance long term growth.

Suggested Citation

  • Cinar, Mehmet & Nulambeh, Ndzembanteh Aboubakary, 2018. "Foreign Direct Investment, Trade Openness and Economic Growth: A Panel Data Analysis for Sub-Saharan Africa," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 9(4), pages 749-760, October.
    • Handle: RePEc:ris:buecrj:0356
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    Citations

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    Cited by:

    1. Nadia Ben Yedder & Malek El Weriemmi & Sayef Bakari, 2023. "The Impact of Domestic Investment and Trade on Economic Growth in North Africa Countries: New Evidence from Panel CS-ARDL Model," EuroEconomica, Danubius University of Galati, issue 2(42), pages 22-41, November.
    2. Chibalamula, Haggai Chibale & Evans, Yeboah & Kachelo, Mukuka & Bamwesigye, Dastan, 2023. "The Effect of Foreign Direct Investment and Trade Openness on Economic Growth: Evidence from Five African Countries," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 15(1), January.
    3. Yeboah Evans, 2024. "The relationship between foreign direct investment and trade openness: Evidence from six developed economies," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 17(2), pages 222-250.
    4. Milin Ioana Anda & Bușan Gabriela & Ecobici Nicolae & Abdul Rehman, 2023. "Economic Growth Drivers in Romania: Evidence from a NARDL Analysis," Sustainability, MDPI, vol. 15(7), pages 1-19, March.

    More about this item

    Keywords

    Foreign Direct Investment (FDI); Trade Openness; Economic Growth; SSA; Panel Data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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