The Social Sciences

Year: 2016
Volume: 11
Issue: 24
Page No. 5830 - 5837

Foreign Direct Investment and Industrial Performance in Africa

Authors : Folasade Bosede Adegboye, Joshua Adewale T. Ojo and Ifeoluwa Israel Ogunrinola

Abstract: The African region compared to other developing regions has been the most vulnerable as regards the impact of Foreign capital inflow on domestic industries performance. The flow of FDI is expected to result into improved investment, technological capacities and acceleration of industrial performance in domestic firms. The study examined how the flow of FDI to the African region has impacted the industrial performance of the region, using the proxy of industry value added. The study made use of pooled data from forty three African countries within the period 1996 and 2015. The method of analysis utilized for the study was the pooled OLS and the fixed effect least-squaredummy variable model, employed to estimate the impact of Foreign direct investment on industrial performance for the selected host countries. The study finds that Foreign direct investment is statistically significant in relation to industrial performance for host African countries but it is dissatisfying that the expected desired features of industrial performance, like increased domestic savings, investment, technology transfer and increased domestic productivity which will result into reduction in high level of import have not been realized. It is therefore recommended that the governments of host countries should put policies in place to encourage performance of industries domestically, to enhance sustained market participation and share of local firms in host economies such that dependence on external financial borrowing could be reduced and domestic investment incessantly increased resulting in improved industrial performance of host countries.

How to cite this article:

Folasade Bosede Adegboye, Joshua Adewale T. Ojo and Ifeoluwa Israel Ogunrinola, 2016. Foreign Direct Investment and Industrial Performance in Africa. The Social Sciences, 11: 5830-5837.

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