FDI-GROWTH NEXUS IN AFRICA: DOES GOVERNANCE MATTER?

This study examined the effects of governance on FDI-growth nexus in Africa both at the aggregated and disaggregated level. It adopted the methodology of panel data technique to examine the interrelationship. The results showed that governance in many African countries was quite weak and thus inhibited growth. When governance was interacted with FDI, it brought about positive and increased growth. This finding was robust to different estimation techniques and disaggregated governance dimensions. The paper suggested that African governments that are desirous of attracting more FDI and thus improving on growth must enhance their governance structure.