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| Title: | Foreign Capital Inflows and Economic Growth in Selected Countries in Ecowas |
| Author(s): | ONYEWUCHI C.E., AMADI S. N., EWUBARE D.B. & CHUKWU S. N |
| Abstract: | This study examined the relationship between foreign capital inflows and economic growth in selected countries in the ECOWAS with a focus on Ghana, Guinea, Liberia, Nigeria, Sierra Leone, Niger, Mali, Senegal, Cote divoire and Rurkina Faso. In particular, foreign capital inflows were measured by foreign direct investments (FDI) inflows, net official development assistance (ODA) inflows, remittances inflow and external debt stocks while economic growth was measured by real gross domestic product (GDP) growth in the ten selected countries. Panel datasets required for this study were obtained from the World Bank database, UNDP Human Development Reports and LMF Financial Statistics. The data were analysed using descriptive statistics, panel unit root test, Rao cointegration tests and panel ARDL estimation involving mean group (MG) and pooled mean group (PMG) estimators as well as the Hausman test. The panel unit root test results showed that the variables are mixed integrated with evidence of 1(0) and 1(1) series in the model. The Rao cointegration test results showed that there is a long-run relationship among the variables in each of the four models at the 5% significance level. The panel ARDL results showed that FDI inflow has a positive and significant effect on real GDP growth in the long run. The estimated parameters showed that a percentage increase in FDI inflows is associated with a 0.3166% increase in real GDP growth in the long run. Evidence of a positive and significant contribution of remittances inflow on economic growth indicator was also established from the long-run results. In particular, that a 1% increase in remittances increase will lead to a 0.0737% and 0.4820% increase in real GDP growth in the long run. The results further showed that external debt negatively affected economic growth by significantly reducing real GDP growth during the study period. Given the findings, this study concludes that governments in the ECOWAS sub-region should strengthen their efforts in mobilizing FD1 to various sectors of the economy by improving economic and political conditions while building strong institutions to restore investors‘ confidence and foster economic growth. |
| Keywords: | Economic growth, foreign capital, FDI, remittances, development aid, external debt and ECOWAS |
| Journal: | Journal of World Economics and Financial Report Vol 1 No 1 |
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