Journal of Business & Economic Policy

Does Foreign Direct Investment Encourage Exporting in Africa?
Olowu Akinseye U

Abstract
The objective of this paper is to determine the relationship between FDI inflows and export in African countries. This research answers the question ‘does foreign direct investment encourage exporting in Africa? The study began by exploring the FDI performance in Africa vis a viz the United Nations Conference of Trade and Development (UNCTAD) data. FDI have been found to be of resource, market and efficiency seeking motives in Africa. It also presents itself as either vertical or horizontal in scope. Panel estimation was used for analysis in three African countries i.e. Benin, Botswana and Kenya based on availability of data derived from the World Bank and IMF. It was found that there were direct relationships between real export and foreign direct investment in the three countries but the relationships were not significant. It was recommended that African countries should promote favorable exchange rates and encourage trade openness in order for FDI inflows to increase export growth.

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