The Impact Of Foreign Direct Investment on Economic Growth of West African Member State’s (A Case Study Of Ecowas) (2001 – 2015) (Published)
Economic Community of West African States (ECOWAS) has been programmed to fuel economic growth of all its member nations not only through trade liberalization and common customs union but through attracting FDI inflow as well. Since its inception, it has been undergoing a series of institutional reforms to achieve its stated objectives. Against this background, this research investigates the relationship between foreign direct investment and economic growth in the Economic Community of West African States (ECOWAS). This study shall use panel data spanning 2001 to 2015. In order to achieve this, the study shall conduct empirical analyses by panel unit root, heterogeneous panel co-integration, and SUR multiple regression. Research findings from Pedroni co-integration test show that there is a cognate relationship between all the factors under investigation concerning ECOWAS region. Co-integration analysis also indicates a positive and significant relationship between variables such as financial development, FDI, domestic trade, and trade openness, while unemployment and social unrest negatively relates to economic growth, though unemployment is not statistically significant. For the sake of caution, this study uses a SUR multiple regression for the robustness test. Empirical result shows FDI strongly relates to economic growth in ECOWAS nation. The results are in consonance with the previous theories on growth-FDI modeling. The research findings suggest that ECOWAS members should provide a conducive and enabling environment to attract a free flow of FDI into their economy.