Foreign Direct Investment, Information Communication Technology and Economic Growth: A study in Sub-Saharan African countries

This study explores the dynamics among foreign direct investment (FDI), information communication technology (ICT), and economic growth within Sub-Saharan Africa (SSA). Spanning from 1995 to 2019, this research employs quantitative analysis and feasible generalized least squares (FGLS) econometric techniques to analyse data sourced from the World Bank indicators concerning 15 diverse SSA countries at various stages of economic development. The study primarily investigates the role and interplay of FDI and ICT in influencing economic growth, focusing on key ICT variables such as mobile phone subscriptions, fixed telephone subscriptions, and internet users.

Within the GDP model, the findings reveal a negative statistically insignificant correlation between FDI and economic growth, suggesting FDI has no impact on economic growth. Conversely, for ICT, mobile phone subscriptions and internet users, exhibit a positive impact on economic growth, highlighting the critical role of modern communication technologies in fostering economic development. In contrast, fixed telephone subscriptions are negatively correlated with economic growth, indicating a shift towards more efficient, up to date technologies. Similarly, under the FDI model, a negative statistically significant coefficient is found between economic growth and FDI. Both mobile phone subscriptions and internet users have a positive impact on FDI while fixed telephone subscriptions have a negative impact on FDI.

The study concludes that to harness the potential benefits of FDI, SSA policymakers should focus on creating a conducive environment, infrastructure improvements, and stronger regulatory frameworks. Furthermore, the significant positive impact of ICT on growth underlines the need for substantial investments in ICT infrastructure and digital literacy to ensure widespread and affordable access. This shift from traditional to modern ICT methods suggests that resources should be redirected towards mobile and internet-based platforms to maximize economic growth and attract FDI. This research provides valuable insights for policymakers aiming to leverage FDI and ICT as catalysts for economic growth in SSA.

Keywords: Foreign Direct Investment, Information Communication Technology, Economic Growth, Sub-Saharan Africa, Econometric Analysis