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technological development has been curbed by competition from foreign technology and

unnecessary diversion of resources to canvass for foreign investment. If countries have

to compete against each other to attract the same foreign investment, they may end up

dissipating all of the potential gains from such investment.

Despite this ugly picture, the countries of the WAMZ possess a bright opportunity

for economic growth. From this study and others, it is obvious that countries with high

rate of economic growth attract more FDI than those experiencing stagnation.9 WAMZ

countries can exploit their local resources for export. In the short run, this may contribute

more to growth than depending on FDI that will be concentrated in an enclave sector

without the basic spillover effects. Even if there may be positive externality from FDI,

there is no justification for special incentives for FDI. In the view of Gregorio (2003),

such discriminatory policies encourage rent seeking, reduce incentives for local

entrepreneurship, and stimulate other forms of distortion in the economy. There is the

potential crowding out, which is growth frustrating.

It is along these lines that we may agree with the opponents of the neo-liberal

theories that FDI worsens the growth prospects of developing countries. Therefore, the

economic growth prospects of the WAMZ countries can only depend on government’s

ability to embark on adequate productive projects that will improve per capita income

and retained savings as the basis for domestic capital accumulation. This will empower

domestic

investors

to

compete

effectively

with

foreign

investors.

Furthermore,

government should create an incentive structure for the private sector. It should invest in

9 For Sub-Saharan Africa as a whole, Bhattacharya et al (1996) identify GDP growth as a major factor determining the flow of FDI. Countries which successfully attract FDI are usually associated with high rate of GDP growth.

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