Investment and Economic Growth in West Africa: Panel Data Evidence from Selected Countries | Chapter 7 | Economics, Business and Management: Recent Advances Vol. 1

 

Economic growth constitutes one of the fundamental macroeconomic objectives, which most nations, especially the developing economies, strive to achieve. Investment plays a critical role in a country’s economic growth by allowing for the use of modern production methods, stimulating innovation, technology transfer and expanding countries’ production efficiency. Both domestic and foreign generally promote economic growth in developing countries. This study examined the impact of investment on economic growth using panel data from selected West African countries over the period 1990–2024. The dependent variable was gross domestic product, while domestic investment, inward foreign direct investment, outward foreign direct investment and insecurity index were the independent variables. The data were sourced from the World Development Indicator and Central Banks of the respective countries. The selected West African countries in focus included Nigeria, Ghana, Liberia, The Gambia and Sierra Leone. A panel random effect model was used in analysing the data. The result obtained revealed that domestic investment had a significant and positive effect on the economic growth of the selected countries, while FDI inflow and the insecurity index exerted negative effects on economic growth. Ghana had the most positive effect as the country recorded positive trends in their domestic investment and inward foreign investment, which exerted positive effects on the country’s economic growth. The study concluded that domestic investments in the selected countries have been appreciable and have increased the economy of the countries, but foreign direct investment inflow and outflow have not had the desired effect on the growth of the countries’ economies. Security challenges continued to pose significant constraints on both inward and outward foreign direct investment (FDI) flows within the region. It is therefore recommended that governments in the West African region enhance the attractiveness of their domestic economies to foreign investors by strengthening infrastructure development, accelerating industrialisation efforts, and leveraging regional trade agreements to promote and facilitate cross-border investments.

 

 

Author(s) Details

A. A. Igwemma
Department of Economics, Faculty of Social Sciences, Imo State University, Owerri, Nigeria.

 

U. Eronini Nnamdi
Department of Economics, Faculty of Social Sciences, Imo State University, Owerri, Nigeria.

 

A. Mbadugha Onyebuchi
Department of Economics, Faculty of Social Sciences, Imo State University, Owerri, Nigeria.

 

C. Ike Chigozie
Department of Economics, Faculty of Social Sciences, Imo State University, Owerri, Nigeria.

 

Please see the book here :- https://doi.org/10.9734/bpi/ebmra/v1/7194