Dynamic Relationship between Chinese FDI, Agricultural and Economic Growth in West African: An Application of the Pool Mean Group Model

Abstract

This study is an attempt to test the long run relationship between Chinese foreign direct investment (FDI), agricultural and economic growth in host countries is known to have an important role in economic literature suffering from unemployment problems, food security and lack of technological progress. This paper examines this issue for West Africa by applying Pool Mean Group (PMG) and panel-Granger causality Models over the period of 2003 to 2015. The Pool Mean Group tests suggest cointegration between China FDI, economic growth, domestic investment and land agricultural used The article indicates that Chinese FDI, domestic investment and land agricultural spur economic growth contrary to some studies, which found that China FDI does not cause economic growth. The results also show that there is no significant Panel-VECM Granger causality from China FDI to economic growth, from economic growth to Chinese FDI, from agricultural to economic growth and from economic growth to agricultural. This implies that the increment in Chinese FDI inflows would definitely lead to increasing the economic growth, domestic investment and agricultural land in West Africa.