ENDOGENOUS GROWTH MODELLING OF FOREIGN DIRECT INVESTMENT IN COMESA COUNTRIES


Wycliffe Mugun
Part-time Lecturer, Department of Economics, Kaimosi Friends University, Kenya
Abstract
To overcome the high poverty levels and improve the standard of living in developing countries there is need for a substantial inflow of external resources in order to fill the savings and foreign exchange gaps. More importantly, several studies have examined relationship between foreign direct investment and economic growth. However, the studies indicate divergent views with a mixture of positive and negative findings and fell short of considering foreign direct investment from other forms of investment. This makes the relationship between FDI and economic growth in COMESA countries to remain unknown. The main objective of the study was to examine the effect of foreign direct investment on economic growth in COMESA countries. The study used World Bank data for a panel of 7 countries for the period from 2005 to 2023. The study was anchored on the endogenous growth model and correlational research design was employed. Hausman specification test was employed so as to ascertain whether to use fixed or the random effect model in the estimation. Results of random effect regression model indicated that natural log of foreign direct investment has positive and significant effect on natural log of economic growth which was statistically significant at one percent level of significance. The study concluded that FDI in COMESA region plays a significant role in accelerating growth though faced by several limitations hindering its stimulation and expansion. The study recommends that COMESA countries should accelerate economic growth through enhanced regional integration in order to attract the market –seeking FDI.
Keywords: Economic Growth, Foreign Direct Investment, COMESA Countries
Journal Name :
EPRA International Journal of Economics, Business and Management Studies (EBMS)

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Published on : 2025-11-12

Vol : 12
Issue : 11
Month : November
Year : 2025
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