The impact of foreign direct investment on Namibia’s economic growth: A time series investigation

Abstract

AbstractThe current study investigates the impact of foreign direct investment on the growth of Namibia’s economy from 1990 to 2020 using the ARDL cointegration method. The results reveal that FDI, the interactive variable of FDI and trade openness, and other macroeconomic variables such as domestic investment, government consumption expenditure, human capital, a proxy for economic stability, and return on investment are responsible for Namibia’s economic growth. The article confirms the FDI-led growth and the Bhagwati hypotheses for Namibia as shown by the FDI and the interactive variable of FDI and trade openness, respectively. To reap the full benefits of FDI on economic growth in Namibia, the government must focus on improving physical infrastructure and the quality of human resources. It should also facilitate the development of an entrepreneurship culture, create a stable macroeconomic environment, and improve conditions for productive investments to accelerate economic growth and development.

Keywords

• Economic growth
• foreign direct investment
• trade openness
• human capital
• return on investment
• government consumption expenditure cointegration