Does FDI Contribute to the Integration into the Global Economy? Time-Series Evidence for Ten African Countries

This study investigates the relationship between FDI and exports in a sample of ten African countries. Using annual data from 1970 to 2007, we find that FDI causes exports in Burkina Faso and South Africa supporting the FDI-led exports point of view, while exports cause FDI in Cameroon, Cote d’Ivoire and Kenya, supporting the hypothesis that outward oriented economies attract more FDI. We find bidirectional causality in Ghana, Nigeria and Zambia, implying a virtuous circle of FDI and exports. We do not find causality for Congo and Gabon.