Foreign Direct Investment, Exports and Economic Growth

Sub-Saharan Africa is poorer than other developing regions in the world. African governments had embarked on substantial reform programmes to promote trade liberalisation and attract foreign direct investment. The study explores the motivations of foreign firms in choosing SSA as their investment location and examines the investment needs of the host economies. In modelling the home motivations, we distinguish between the labour and non-labour factors that attract FDI. The needs of the recipients are captured via the growth effect of FDI through the trade channel. The presence of international political economy factors in SSA are also considered.