Research On The Determinants Of Economic Growth Is A Common

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Research on the determinants of economic growth is a common focus area in the economics – both because economic growth is an excellent indicator of well-being and the policy-makers want to know what fact2ors can affect this well-being. Previous literature has identified many factors which contribute to the well-being of a country and among these factors; Foreign Direct Investment is persistently seen. Economists have limited tools to measure well-being; reliance on GDP, GDP per capita, GDP growth rate, Human Development Index (HDI) and other such macroeconomic indicators are often used to measure the well-being of the nation. And it is equally important for the governments and governing bodies to find the factors which can affect these…show more content…
This paper thus will add value to the existing literature and find the impact of FDI particularly on the African countries. The further sections will develop on the existing literature in this regard, the importance and need for this research and the empirical strategy to evaluate the research question.
1.1) Research Rationale
Quantifying the factors which affect economic growth is important for policy-makers and some of these factors have already been identified in the literature. However, the direction of these factors on economic growth is ambiguous and this research will try to find a causal relationship between FDI and Economic Growth using empirical data from African countries. This research will add evidence on the research of economic growth determinants of and allow relevant policy-makers to make policies attracting or deterring FDI depending on the strategy the country wants to pursuit.
1.2) Research Question
The research questions of the paper can be explicitly written down as: what is the impact of FDI on Economic Growth in Developing countries? What are the other factors which affect Economic Growth in Developing countries? It is important to mention here that this research addresses developing countries and the external validity of this research to developed countries is not advocated. To
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