Effect of Foreign Direct Investment (FDI) and Institution on Economic Growth in Economic Community of West African States (ECOWAS)

Abstract

This study investigated the impact of foreign direct investment and institutional quality on economic growth in ECOWAS. The countries selected for the study include Benin Republic, Burkina Faso, Cape Verde, Cote d'Ivoire, Gambia, Guinea, Guinea-Bissau, Ghana, Liberia, Mali, Niger, Nigeria, Sierra-Leone, Senegal and Togo The annual data is spanned from 1970 to 2017. Fixed effect model was used to model the two objectives. Pre-estimation test and post-estimation test were conducted to ascertain the nature of the data and to also examine the robustness of the regression results. The result indicated that foreign direct investment has a positive impact on the real economic growth in ECOWAS countries. sourced from world development indicators (WDI, 2018) and worldwide governance indicators (WGI, 2018), scoped 2000-2017. Again the estimator provides support for the proposition that foreign direct investment, control of corruption and the political stability have an insignificant impact on economic growth of ECOWAS. However, the regulatory quality was found to have a potent significant positive impact on economic growth of ECOWAS.