This study examined the Granger causality between foreign direct investment and economic growth and between foreign direct investment and business environment which proxied by human capital and infrastructure in 51 African countries in the period from 1992 to 2012. We found that there is a feedback relationship between foreign direct investment and growth and between foreign direct investment and business environment in the full sample countries. The results also suggest that the causality patterns are varying at the different stages of the income levels which reveals that the causality between the variables of interest are highly heterogeneous.
Download