Economic Growth and Foreign Direct Investment Transnational Exploration in Africa Using Panel Integration and Panel Estimation

Abstract

The existing macroeconomic literature on the link between foreign direct investment and growth has identified the potential gains from FDI for recipient countries only if they reach a threshold level of absorptive capacity. The present study made an effort in this direction to determine whether FDI affects economic growth based on panel data for 20 African economies over the period 2010-2020. Investment and economic growth. The results strongly suggest that although FDI improves growth in Africa, the extent of its impact depends on absorptive capacity thresholds measured by levels of human capital and infrastructure. African economies that meet these thresholds can only reap the benefits of FDI. This study therefore provides compelling evidence of the synchronized efforts of African economies to attract FDI for their economic growth.