Determinants of Foreign Direct Investments in the West African Economic and Monetary Union (WAEMU)

Abstract

Foreign direct investment is nowadays seen as an important factor of growing the economy In fact it brings to a country not only the needed capital but also advanced technology employment taxes for government etc Mindful of its importance in 1994 eight west African countries have decided to come together in creating an economic and monetary union which could help to prime their development by attracting more foreign capital Regarding its importance for such countries where the national savings are low it is necessary to investigate what are the main factors that make this union attractive to foreign investors Hence this thesis analyzes the determinants of foreign direct investments in the west African economic and monetary union between 1996 and 2015 In that purpose thirteen variables have been identified as possible determinants and data have been collected from the world bank the United Nations Conference on Trade and Development (UNCTAD) and the Global Economy databases to build an empirical model The study is based on panel data analysis since we aim to identify FDI’s determinants both on the spatial and temporal dimensions And among the different models to tackle the panel analysis the random effect model is used because heterogeneity specification test suggests that this model is more suitable for our study From our empirical results it turns out that only the market growth is not statistically significant FDI inflow is sensitive to all the other variables It also shows that the relationship between FDI inflation and natural resources is a weak (10% significance level)

Date of Award	2017 Jun 29
Original language	English
Supervisor	Hsuan-Chu Lin (Supervisor)