TRADE BALANCE AND FOREIGN DIRECT INVESTMENT INFLOWS: A NEW PERSPECTIVE ON GROWTH IN AFRICA
TRADE BALANCE AND FOREIGN DIRECT INVESTMENT INFLOWS: A NEW PERSPECTIVE ON GROWTH IN AFRICA

Summary/Abstract: This study analyses the relationship between Foreign Direct Investment (FDI), trade balance and economic growth in Africa employing Panel least square methods (Fully Modified Least Squares (FMOLS) and Dynamic Least Squares (DOLS)) for forty-two (42) Africa countries for the period of 1995 to 2017. The analysis revealed that Foreign Direct Investment (FDI) positively and significantly affect economic growth in Africa while trade balance exhibited a negative and significant effect on economic growth in Africa. These results were separately and individually affirmed by Panel least square methods estimation techniques employed. From the findings, recommendations such as ensuring that trade deficits emanates through productive investment, implementation of policies that attract more FDI inflows to Africa and strengthening of cross border relations using the instrumentality of Africa Union (AU) were proffered.This study analyses the relationship between Foreign Direct Investment (FDI), trade balance and economic growth in Africa employing Panel least square methods (Fully Modified Least Squares (FMOLS) and Dynamic Least Squares (DOLS)) for forty-two (42) Africa countries for the period of 1995 to 2017. The analysis revealed that Foreign Direct Investment (FDI) positively and significantly affect economic growth in Africa while trade balance exhibited a negative and significant effect on economic growth in Africa. These results were separately and individually affirmed by Panel least square methods estimation techniques employed. From the findings, recommendations such as ensuring that trade deficits emanates through productive investment, implementation of policies that attract more FDI inflows to Africa and strengthening of cross border relations using the instrumentality of Africa Union (AU) were proffered.

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