Abstract
Foreign Direct Investment (FDI) can help create jobs, reduce unemployment, improve world-class technology transfer, and grow countries’ economies. During the past 10 years, FDI net inflows to the Central African Economic and Monetary Community (CEMAC) has highly fluctuated and remained below to the total amount reached in 2010. The focus of this research was to statistically analyze the mean difference for FDI net inflows, GDP per capita, natural resource rents, inflation rate, corruption index, trade openness index, rule of law index, and political stability index received in each CEMACs country. Paired t-test methodology was used to conduct the analysis. Data were collected from the World Bank Group database from 2007 to 2017. This research revealed that FDI net inflows decreased by an average of two billion dollars in CEMAC when conducting a mean-to-mean analysis from the recession period to the recovery period. The findings showed that FDI net inflows inversely affected the GDP per capita in Congo and Gabon. FDI net inflows may have contributed to the improvement of the GDP per capita in countries such as Cameroon, Chad, Central Africa Republic, and Equatorial Guinea. Researcher recommendation for continued study is a qualitative research using the same variables through the same periods in addition to year 2018. Improvement of economic policies, regulations and laws, as well as the digitalization of public funds management are also recommended to boost economic development and growth in the CEMAC region.
Highlights
The Central African Economic and Monetary Community or CEMAC is an organization made up of Cameroon, Central Africa Republic, Chad, Congo, Equatorial Guinea, and Gabon
This study found that Foreign Direct Investment (FDI) net inflows, gross domestic product (GDP) per capita, trade openness, total natural resource rents, political stability, and rule of law decreased over the period 2007-2017, while inflation rate and control for Corruption Perception Index increased over the same period
This means that FDI net inflow reduction may have a direct influence on host countries’ productivity and long-term growth in CEMAC region
Summary
The Central African Economic and Monetary Community or CEMAC is an organization made up of Cameroon, Central Africa Republic, Chad, Congo, Equatorial Guinea, and Gabon. Since their independence in the 1960s, there has been a rampant economic stagnation and growing poverty in the region caused by both exogenous and endogenous factors. With a natural-resources-based and underdeveloped economy, CEMAC countries have relied for the most part on FDI inflows in the region. The history of FDI inflows in CEMAC countries can be traced from the colonization era by some European countries (Ngongang, 2012). During the past 2 decades, major investors in this region have been the United States of America, France, United Kingdom, China, and Italy (United Nations Conference on Trade and Development [UNCTAD], 2017)
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