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physical capital and infrastructure. This will be beneficial to both domestic and foreign

investors.

On the external front, the analysis above suggests that debt relief will encourage

FDI flow to these countries. The outstanding debt stock has been a disincentive to

foreign

investors.

The

current

effort

by

international

donor

agencies

through

the

millennium development goals (MDGs) initiative to reduce the debt burden of

developing countries to sustainable levels is, therefore, a good and welcome

development.

5. Conclusions

In this paper, issues on FDI and growth in WAMZ countries were raised and discussed.

From the theoretical model and empirical analysis that followed, we came to the

conclusion that FDI depended on the market size measured by the level of per capita

income and the growth of GDP, as well as the level of uncertainty measured by political

instability and macroeconomic instability or inflation. There was no evidence of any two

way

relationship

between

FDI

and

economic

growth.

However,

we

have

found

a

high

rate of economic growth to be an important determinant of foreign direct investment

location

decisions.

Among

other

factors,

public

investment

in

infrastructural

development, macroeconomic stability and political stability will encourage the flow of

FDI to the region.

22

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