The African Business Review May-Jun 2014 | Page 41

Figure 4. Trends in FDI and growth in Central Africa.

Figure 5. Trends in FDI and growth in South Africa.
is the most active indicator when compared to others. Besides,
governments of most SSA countries take the lead role in economic
participation and the private sector is left to play second fiddle
role in the economy.

It is interesting to note that economic growth which is being
experienced in countries like the Congo Republic, Egypt, Tunisia,
South Africa and Zimbabwe are not caused by FDI. Thus, it is
imperative to state categorically that other factors of economic
growth other than FDI have been beneficial in such countries.
Thus, governments in such countries should develop their financial
sector to the required level so as to achieve the benefits of FDI.

In addition to this, Democratic Republic of Congo is the only
country whose different FSD indicators were able to reach the
requisite thresholds. Also, five countries were able to attain the
threshold value for only two FSD indicators while others were
unable to reach the threshold value, thus, implying that growth
of such countries is not attributable to FDI.

4

5

As earlier stated, the study adopts a time series analysis for 15 countries. Due space
management, it is practically impossible to report all the variables in the model
individually for the 15 countries. What we did was to report the parameter for the
interactive term between FDI and FSD only, since the objective of the study is to
determine the threshold value for FSD that will lead to growth through FDI.
However, the full result can be made available on request.

Tests for the significance of threshold effects

Having identified the threshold level for FSD indicators in
selected countries in SSA, it is important to determine whether
the threshold effects are statistically significant. To do this,
The level of FSD in the chapter refers to the required level of FSD that will
necessitate the positive impact of FDI on growth. The value is expressed as a
percentage share of GDP

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