8. FDI and Sub-Saharan Africa’s Economic Growth Cycle

This chapter examines the complex interplay between foreign direct investment (FDI) and Sub-Saharan Africa's economic growth cycle. It explores the theories of dependency and post-colonialism, highlighting how these frameworks explain the region's sub-optimal economic development. The chapter delves into the potential of FDI to drive economic growth, discussing the export-led, import-led, and FDI-led growth hypotheses. It also analyzes the role of financial sector development in economic growth and the interlinkages between these factors. The chapter concludes with an empirical analysis of the causal relationships between economic growth, trade, FDI, and financial sector development in Sub-Saharan Africa, providing insights into the region's economic dynamics and the potential for FDI to foster sustainable development.