Impact of Foreign Direct Investment on the Growth and Development of ECOWAS Countries

Foreign Direct Investment (FDI) flows are greatly needed in West African countries, and their attraction to the countries is determined by different factors. These factors include GDP per capital, trade openness, inflation, political terror scale, infrastructure, corruption, and real effective exchange rate. This paper reviews impact of foreign direct investment on the growth and developmental levels of Economic Community of West Africa States (ECOWAS) nations for the period of twenty-five years (1990-2015), thus capturing different periods of the economic cycle of the countries. This study employs the OLS regression analysis to determine the significance of FDI inflow to ECOWAS countries. Results of the study reveals that ECOWAS countries have been lagging behind in making good use of FDI, thereby missing a lot of the benefits that could have accelerated growth and development of the nations. Some of the reasons hindering the effective use of the FDI in those countries are poor trade openness, political terror scale, wide infrastructural deficit, and high-level corruption. These are the reasons that amount to insignificant impact of FDI inflow to the ECOWAS countries, using five countries as samples. It is hereby recommended that governments and people of the ECOWAS countries have to be up to their responsibilities of playing their appropriate roles of ensuring that enabling investment environment is put in place so as to attract FDI into the countries for fast growth and development. The people hold the voting cards to change government for the better and those in government should respect the people who might disgrace them by voting them out of political relevance.