FDI and economic growth: Can we expect FDI to have a positive impact on the economic growth in Sub-Saharan Africa?

This paper examines the effect of foreign direct investments, FDI, on economic growth in developing countries. This is done by the presentation of a theoretical framework, in which technological transfer and the learning of new technologies is considered to be the engine of growth along with a critical examination of a number of empirical studies on the subject. I will later on perform a discussion of the underlying conditions for FDI to work efficiently along with the implications for Sub-Saharan Africa regarding FDI inflows. The implications are studied within a framework that considers human capital as an important channel through which the potential benefits arising from FDI may be realized.


1. Introduction
1.1 Purpose
1.2 Method
2. Theoretical framework
2.1 A simple model of growth and development (Jones 2002)
2.2 Steady-state analysis
2.3 The benefits of FDI
3. Empirical analysis
3.1 Explanatory variables
Table 1 – A research summary of empirical studies
regarding FDI and economic growth
4. Methodological problems
5. Implications for Sub-Saharan Africa
5.1 Incentives for FDI
5.2 The Sub-Saharan African dummy
5.3 The absorptive capacity and human capital
5.4 The human capital threshold
5.5 Non-linearity
6. Conclusions

Author: Nilsson, Johanna

Source: Uppsala University Library

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