FDI, entrepreneurship and economic growth: a cross-sectional analysis of sub-Saharan Africa
Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
It has been observed by previous studies that foreign direct investment play a determinant role in the growth of an economy both in developed and developing countries. It has equally been established that entrepreneurship is key to the long-run growth enjoyed in most developed countries. The idea behind this thesis is to investigate whether foreign investments in harmony with entrepreneurial spirit in the host countries would play a more significant role. The aim is therefore, to search for the effect of the interaction between foreign direct investment inflow and the entrepreneurship on the economic growth in the sub-Saharan African region. A cross-sectional regression of data from 2005 to 2013, over a sample of 37 countries is carried out, where Institutional and macroeconomic indicators are held as control variables. A sketch of possible reasons behind the bad economic situation is illustrated in the beginning, followed by the empirical analysis. The empirical analysis made using OLS regression shows FDI to be significantly positive, while the entrepreneurship proxy variable turns out to react unexpectedly. This is not in harmony with the Grossman and Helpman innovation based growth model used in the thesis. Nevertheless, the regression finds a negative but not significant effect of the interaction between FDI and entrepreneurship on economic growth. Institution sensitive variables and macroeconomics variables show expected impact on economic growth. The ease of doing business, rule of law, external debt ratio and government expenditure are proven to enhance economic growth.
Place, publisher, year, edition, pages
2015. , 31 p.
Key words: foreign direct investment, entrepreneurship, economic growth, sub-Saharan Africa
IdentifiersURN: urn:nbn:se:sh:diva-27852OAI: oai:DiVA.org:sh-27852DiVA: diva2:825700
Subject / course
UppsokSocial and Behavioural Science, Law
Blomskog, Stig, Högskolelektor
Swain, Ranjula Bali, Professor