IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 7 NO. 2 2022

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A Panel Data Analysis of the Contribution of FDI Inflows to Economic Well-Being in the West African Monetary Zone (WAMZ)

Christopher Ifeanyi Ezekwe & JohnboscoChukwumaOzigbu

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Abstract

There is growing interest in the development and international economics literature in understanding the role FDI plays in the host low-income countries. This study contributed to this literature by exploring the contribution of FDI inflows to economic well-being in the West African Monetary Zone (WAMZ). Panel data for the six countries (Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone) in the WAMZ were obtained from the World Development Indicators (WDI) and analyzed using descriptive statistics, IPS unit root test, Pedronicointegration test, Hausman’s test and random effects model. The unit root test results showed that the variables are all integrated of order one. Evidence of long-run relationship among the variables was also established from the Pedronicointegration test results. The estimated random effects model showed that FDI contributed positively to per capita GNI. The significant positive contribution of FDI inflows to per capita GNI highlighted the substantial role played by FDI in improving the economic well-being of the population in the WAMZ. The results further revealed that exports contributed positively to per capita GNI while imports adversely affected per capita GNI. Overall, the findings lay credence to the postulation in extant literature that FDI is an important source of economic development in the host countries. Thus, it is recommended that policymakers in the WAMZ should encourage substantial FDI inflows by improving the ease of doing business and promoting good governance to create more opportunities for improved economic well-being

keywords:

Economic well-being, FDI, exports, imports and WAMZ

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