Acta Universitatis Danubius. Œconomica, Vol 14, No 6 (2018)

Abstract

The primary objective of this study was to explore the relationship between FDI, infrastructural development and economic growth using a panel of nine African countries, over the period 2009 -2016. There is no single economic theory, which explains the effect of infrastructure on economic growth. Using panel data analysis the results from Fixed Effects model show that economic growth is positively related to both infrastructure development and FDI. However, the relationship is not significant. Furthermore, government spending and domestic credit to the private sector are positively related to economic growth and the relationship is significant. It is therefore recommended that the Governments of these African countries intervene and put policies in place to develop their local infrastructure so that it can further grow its economy, thereby increasing employment and trade opportunities, especially if it wishes to attract foreign investors. Also, African countries are encouraged to put in place polices that promotes political stability, property rights, human rights and rule of law in order to attract FDI.