Foreign Direct Investment Inflows and the Industrialization of African Countries

•The impact of FDI inflows on industrialization in Africa is analyzed.•Panel data from 49 countries over the period from 1980 to 2009 are used.•FDI did not have a significant impact on the industrialization process.•It is inferred that it is due to the over-reliance on natural resources.•Inadequate...

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Bibliographic Details
Published in:	World development 2015-10, Vol.74, p.43-57
Main Authors:	Gui-Diby, Steve Loris, Renard, Mary-Françoise
Format:	Article
Language:	eng
Subjects:	Africa Capital movement Economic impact Economics and Finance foreign direct investment Foreign investment Humanities and Social Sciences Industrial development industrialization International trade panel data Studies
Online Access:	Get full text
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Summary:	•The impact of FDI inflows on industrialization in Africa is analyzed.•Panel data from 49 countries over the period from 1980 to 2009 are used.•FDI did not have a significant impact on the industrialization process.•It is inferred that it is due to the over-reliance on natural resources.•Inadequate government interventions may also explain this result. This paper examines the relationship between inward foreign direct investment (FDI) and the industrialization process in Africa. It uses panel data from 49 countries over the period of 1980–2009. The results indicate that FDI did not have a significant impact on the industrialization of these countries, while other variables, such as the size of the market, the financial sector, and international trade were important. This study concludes that the role of FDI in the transformation agenda, which is currently being discussed in Africa, should be carefully analyzed to maximize the impact of these capital inflows.
ISSN:	0305-750X 1873-5991