Foreign Direct Investment Effect on Economic Growth: Evidence from Guinea Republic in West Africa

Abstract

The aim of this paper is to understand the contribution of Foreign Direct Investment on Guinea Republic’s Economic growth. The Granger Causality Test is used to study the relationship between FDI and Economic Growth proxies. Our results show that the level of FDI is still low in order to promote economic growth for the Guinea Republic. Indeed, the Granger Causality Test demonstrated that the GDP can promote the level of foreign direct investment, which means that if the level of GDP increases in Guinea, FDI will also follow. Some other factors as EMPLOYMENT can promote FDI, thus the Guinean government has to play the key role of employment promotion to attract investments from abroad. In other way, we found also that school enrollment can increase the GDP and indirectly the FDI. Actually, the economic situation of Guinea has to be ameliorating by policies and regulations, which can attract and protect investors, even to attract Guinean Diaspora’s investment.