Foreign Direct Investment and Economic Growth in Africa

Countries need equitable, broad-based economic development if they are to recover from violent conflicts. In Africa, if the state of the economy improves and the benefits of economic growth are widely distributed, the former conflicting parties are more likely to develop a stake in peace and learn to resolve differences through mainstream political negotiations rather than through violence. If the economy falters, the struggle to control scarce resources is likely to remain one of the key strategic goals of continuing warfare in Africa. Today most countries in Africa are opening their borders and doors to foreign investment, since it is considered as an important stimulus to economic growth. This chapter generally interrogates Foreign Direct Investment and Economic Growth in Africa. It specifically examines the actors in FDI. Secondly, it assesses the factors responsible for FDI in any given country and lastly it evaluates the effects of FDI on Africa. A descriptive research design enabled secondary data to be collected. The data were analyzed qualitatively. The chapter concludes that FDI on its own is not a panacea for rapid growth and development. Recommendations in relation to FDI in developing countries have also been provided.