Effect of Foreign Direct Investment on Economic Growth in Anglophone ECOWAS countries:
Generalized Method of Moment (GMM) Approach
Abstract
This study explores the effect of foreign direct investment on economic growth in five Sub-Saharan African countries, specifically the Anglophone ECOWAS countries such as Gambia, Ghana, Liberia, Nigeria, and Sierra Leone, using the generalized method of moment (GMM) approach, descriptive statistics, and correlation matrix, for a panel data from 1984 to 2024. Specifically, the study analyzes the effect of foreign direct investment (FDI), trade balance (TRB), exchange. The correlation matrix results show that there is a positive correlation between foreign direct investment and economic growth, and the descriptive statistics results show that trade openness and real exchange rate have higher mean, maximum, and minimum values, as well as higher standard deviation, when compared to other variables. The findings highlight the necessity of implementing appropriate macroeconomic policies and institutional environment to maximize the growth-enhancing advantages of foreign direct investment in Sub-Saharan Africa.
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