ABSTRACT

I explored the impact of foreign direct investment (FDI) on economic growth and domestic investment and compared the results between East and West African countries. The overall results indicate that foreign direct investment promotes economic growth and that higher FDI inflow induces higher growth rates. FDI is also found to crowd in domestic investment likely attributable to technology transfer and related spillover effects. Comparing East and West African countries, it is found that the positive effect of FDI on growth is driven by West African countries while the positive effect of FDI on domestic investment is led by East African countries.

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