The Impact of FDIs Flows on the Nigerien Economic Growth

Abstract

Niger, since the 70s has always adopted an approach that makes the IDE a major component of its development plan. It `s so, a series of measures have been taken to make the country more attractive to Foreign direct investment FDI This policy has guaranteed the country a few annual flow between the period 1970 to 2008.The aim of this paper is to try to study the impact of FDI on economic growth in Niger. Observe the literature study on FDI in Niger, however, it is also becoming important to see the between FDI and economic performance since it has not been addressed specifically yet. While it is still unclear of whether there is any relationship between FDI and economic growth in Niger, especially as regard to the causality within the relationship.
The theory and the current empirical literature on the relationship between FDI and growth have provided ambiguous results. Using VAR (Vector Autoregressive) model, this paper explores the causal relationship between FDI and economic growth for the period 1970-2008 in Niger. With in the Granger causality framework, this study finds a long-term relationship between FDI and economic growth. This finding is a long-term relationship between variables but failed to establish the direct correlation between each variable. This can be explained by the fact that low volume flows of FDI in Niger have major consequences on the economic system, particularly on employment, inflation and GDP. More, this weakness is emphasized by the insignificance of the volume of capital flows (domestic and foreign) circulating in the Nigerian economy and domestic savings.