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

Summary/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.

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