Business and Economics Journal

The Significance of Foreign Direct Investment to the Economic Development of Sub Saharan Economies

Abstract

Ismalia Amadu, Wilfred Anyi Ndongko and Bobbo Moussa

This study attempts to evaluate the impact of Foreign Direct Investment on the economic development of forty three (43) Sub Saharan African countries. The Auto Regressive Vector (VAR) model was employed to effectuate econometric estimations, using annual data obtained from the database of the World Bank: World Development Indicators-WDI, 2018 for the period spanning from 1997 to 2017. The findings of the study show that FDI has a negligible impact on the economic development of the countries studied, whereas economic development that has a positive and strong impact on FDI. It is therefore recommended that: first African economies should develop value chains and attract FDI geared towards the transformation of their natural resources; and second they should improve pro-industry elements like adequate electricity supply, good transportation network, skilled labor, and technological development.