Growth Impact of Foreign Direct Investment in the COMESA Region: Does Infrastructure Development Matter?

- 20 November 2019

Trade topics: COMESA, Economic Growth, Foreign Direct Investment, Generalized Method of Moments, Infrastructure

Using country-level panel data, this study investigates the impact of foreign direct investment on the gross domestic product per capita in the Common Market for Eastern and Southern Africa region over the 2000- 2015 period. The estimates are generated using the one-step generalized method of a moments-difference estimator. The study found that foreign direct investment exerted a negative while quality development of infrastructure has a positive impact on economic growth in the region. In addition, the quality development of infrastructure has a positive effect on the ability of the region to absorb and benefit from the spillovers of foreign direct investment. The findings suggest that the states of the region should target to attract foreign direct investment which complements economic growth and improve the quality development of infrastructure so as to realize positive economic growth from the investment.

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