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The Disappointing Performance of Foreign Direct Investment in Industrial Development in Sub-Saharan African Countries

Ojo, Joshua A. T. and Adegboye, F.B. and Olokoyo, F. O. (2017) The Disappointing Performance of Foreign Direct Investment in Industrial Development in Sub-Saharan African Countries. International Journal of Economics and Financial Issues, 7 (2). pp. 677-681. ISSN 2146-4138

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The Sub-Saharan African (SSA) region compared to other developing regions has been the most vulnerable as regards foreign capital inflow. The flow of foreign direct investment (FDI) is expected to result into advanced managerial and technological capacities and acceleration of industrial development. The study examined how the flow of FDI to the SSA region has impacted the industrial development of the region, using the proxy of industry value added growth. The study made use of pooled data from thirty three SSA countries within the period 1993 and 2012. The method of analysis utilized for the study was the fixed effect least-square dummy variable model, employed to estimate the impact of FDI on industrial development for the selected host countries. The study finds that FDI is statistically significant in relation to industrial development for host SSA countries; but it is disappointing that the expected desired features of industrial development, like increased manufacturing outputs, reduction in high level of import and manufactured goods; etc., have not been realized. It is therefore recommended that the governments of host countries should put policies in place to encourage development of industries domestically, to enhance sustained industrial development, such that dependence on external financial assistance and borrowing could be reduced, resulting in sustained increases in non-oil export earnings, domestic income, savings, investment, technology, and hence improved living standard.

Item Type: Article
Uncontrolled Keywords: Foreign Direct Investment, Industrial Development, Sub-Saharan African Countries
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HG Finance
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Hannah Akinwumi
Date Deposited: 28 Aug 2017 12:54
Last Modified: 28 Aug 2017 12:54

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