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FDI as a contributing factor to economic growth in Burkina Faso: How true is this?

Author

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  • Zandile Zezethu

    (Department of Economics, Nelson Mandela University)

  • Andrew Phiri

    (Department of Economics, Nelson Mandela University)

Abstract

Much emphasis has been placed on attracting FDI into Burkina Faso as a catalyst for improved economic growth within the economy. Against the lack of empirical evidence evaluating this claim, we use data collected from 1970 to 2017 to investigate the FDI-growth nexus for the country using the ARDL bounds cointegration analysis. Our empirical model is derived from endogenous growth theoretical framework in which FDI may have direct or spillover effects on economic growth via improved human capital development as well technological developments reflected in urbanization and improved export growth. Our findings fail to establish any direct or indirect effects of FDI on economic growth except for FDI’s positive interaction with export-oriented growth, albeit being constrained to the short-run. Therefore, in summing up our recommendations, political reforms and the building of stronger economic ties with the international community in order to raise investor confidence, which has been historically problematic, should be at the top of the agenda for policymakers in Burkina Faso.

Suggested Citation

  • Zandile Zezethu & Andrew Phiri, 2018. "FDI as a contributing factor to economic growth in Burkina Faso: How true is this?," Working Papers 1823, Department of Economics, Nelson Mandela University.
    • Handle: RePEc:mnd:wpaper:1823
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    Cited by:

    1. Lukman A. Olorogun, 2024. "Modelling Financial Development in the Private Sector, FDI, and Sustainable Economic Growth in sub-Saharan Africa: ARDL Bound Test-FMOLS, DOLS Robust Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8416-8434, June.
    2. Lukman Ayinde Olorogun, 2022. "Revisiting the Nexus of FDI-Led Growth Hypothesis and Economic Development in Rwanda: a Johansen-ARDL Approach to Cointegration," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2695-2717, December.
    3. Udi Joshua & David Babatunde & Samuel Asumadu Sarkodie, 2021. "Sustaining Economic Growth in Sub-Saharan Africa: Do FDI Inflows and External Debt Count?," JRFM, MDPI, vol. 14(4), pages 1-13, March.

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    More about this item

    Keywords

    Per capita GDP; Convergence; unit root tests; nonlinearities; structural breaks; BRICS Emerging economies;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • 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

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