Analysis of the Determinants of Foreign Direct Investment Flows to the West African Economic and Monetary Union Countries
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Date
2011-08
Authors
Batana, Yélé Maweki
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
One of the problems facing sub-Saharan African countries is the low level of domestic
investment. And yet the growth theory teaches us that it is impossible to envision
development without a considerable accumulation of capital. An important channel
through which these countries can solve the problem is to resort to foreign direct
investment (FDI), especially since we know the significant role FDI played in the
economies of several Asian countries. To date, countries in sub-Saharan Africa have
not benefited enough from this type of capital. Several reasons for this exist, and they
vary with countries and regions. This study, using dynamic panel data, is an attempt to
identify the main determinants of the flows of private foreign investment into countries
of the West African Economic and Monetary Union (WAEMU). After a review of the
general framework of the study, three estimations were carried out: a “within” estimation,
a random effect (RE) estimation, and an estimation using the Arellano and Bond (1991)
Generalized Moments Method (GMM). This enables one to get a more effective estimator
in cases of dynamic panels. It transpires from the main findings of the research that
the rate of domestic investment, literacy, the level of economic openness, and delayed
foreign investment are relevant factors that account for foreign investment flows to the
WAEMU countries.
Description
HG 5870. A3 M39 2011
Keywords
Investment, Foreign -- Africa West , Investment, Foreign