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The Impact of Infrastructure development on Foreign Direct Investment in Cameroon

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  • Mbiankeu Nguea, Stéphane

Abstract

Better access to improved infrastructure services is one of the components of a favourable investment climate for foreign investors and an important engine for sustainable economic growth. This study investigates the impact of communication, energy and transport infrastructure development on Foreign Direct Investment (FDI) in Cameroon over the period 1984-2014. Auto Regressive Distributed Lags (ARDL) bounds test approach to cointegration has been applied to analyse the annual time series data coming from United Nations Conference on Trade and Development (UNCTAD) and World Development Indicators (WDI). The results show that communication infrastructure exerts a positive and significant impact on FDI inflows. In addition, energy infrastructure reduces the volume of FDI inflows, while transport infrastructure is not relevant in attracting FDI inflows. According to these findings, this study recommends that the government of Cameroon pay further attention to improving the quality of infrastructure in order to attract more FDI.

Suggested Citation

  • Mbiankeu Nguea, Stéphane, 2021. "The Impact of Infrastructure development on Foreign Direct Investment in Cameroon," MPRA Paper 108372, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:108372
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    1. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    2. Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
    3. K. C. Fung & Alicia Garcia‐Herrero & Hitomi Iizaka & Alan Siu, 2005. "Hard Or Soft? Institutional Reforms And Infrastructure Spending As Determinants Of Foreign Direct Investment In China," The Japanese Economic Review, Japanese Economic Association, vol. 56(4), pages 408-416, December.
    4. Prince Jaiblai & Vijay Shenai, 2019. "The Determinants of FDI in Sub-Saharan Economies: A Study of Data from 1990–2017," IJFS, MDPI, vol. 7(3), pages 1-31, August.
    5. Mehdi Behname, 2012. "Foreign Direct Investment and Urban Infrastructure An Evidence from Southern Asia," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 2(4), pages 1-16.
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    Cited by:

    1. Mbiankeu Nguea, Stéphane & KAGUENDO, Ulrich Vianney Elisée, 2022. "Are growth effects of foreign capital significant for increasing access to electricity in Africa?," MPRA Paper 111604, University Library of Munich, Germany.
    2. Mbiankeu Nguea, Stéphane & Kaguendo, Ulrich Vianney Elisée & Noumba, Issidor, 2022. "Are growth effects of foreign capital significant for increasing access to electricity in Africa?," Energy Policy, Elsevier, vol. 168(C).

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    More about this item

    Keywords

    Infrastructure; ARDL; FDI; Cameroon;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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