Abstract
The objective of this paper is to analyze the effect of net foreign direct investment revenues on human development in Cameroon through its Human Development Index (HDI). The data used are from secondary sources, ranging from 1995 to 2019, and are mainly from the 2018 World Development Indicator (WDI) and the United Nations Development Program (UNDP). For this reason, we have carried out, through the estimation of an auto-regressive distributed lagged model (ARDL), tests of the stationary (Dickey-Fuller Augmented) and of the co-integration of (Johansen), on the variables defined before appreciating the Vector Error Correction Model (VECM). The results are at two levels. In the long term, there is a positive relationship between the two variables, which is simply justified by the fact that trade opening strengthens access to larger markets and thus contributes to the HDI. This situation offers wider consumer ranges and it could likely, therefore, help to attract more multilateral companies; in the short term, however, the relationship between the two variables is negative. This may be primarily due to the fact that export revenues are not used in the context of human capital enhancement, or that the HDI is influenced by spending on education. The government’s priority should be to maintain and diversify its investments in social infrastructure and to encourage investments in labor-intensive sectors that benefit the poorest, such as agriculture, social, and infrastructure.
Highlights
Foreign Direct Investment (FDI) remains one of the channels through which globalization can help developing countries
The data used are from secondary sources, ranging from 1995 to 2019, and are mainly from the 2018 World Development Indicator (WDI) and the United Nations Development Program (UNDP)
It is found that most empirical studies on the relationship between FDI and the said variables show that the effects are not always positive and significant
Summary
Foreign Direct Investment (FDI) remains one of the channels through which globalization can help developing countries. It has always proved to be a very effective tool for promoting economic growth They have always proved to be more reliable than other forms of foreign capital even in the midst of financial crises. In most developing countries like ours, the private sector is the main engine of growth and FDI appears to be an important source of capital investment and a key factor in achieving the MDGs. in view of the persistent financial and economic crises in the world, developed countries are designing economic and fiscal policies that focus on keeping capital at home. In view of the persistent financial and economic crises in the world, developed countries are designing economic and fiscal policies that focus on keeping capital at home The behavior of these countries further undermines the achievement of the MDGs2. The role of foreign direct investment in Cameroon has become essential to their development because of the positive externalities it generates in the economy
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