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Special Graduate Schools
Graduate School of International Studies
Department of International Development Cooperation
3. Theses(Master)
INVESTIGATING THE RELEVANCE OF FOREIGN DIRECT INVESTMENT (FDI) ON ECONOMIC GROWTH: THE CASE OF CAMEROON
- Author(s)
- EKO, NGWE JULIET
- Advisor
- IAN WATSON
- Department
- 국제대학원 국제개발협력학과
- Publisher
- Graduate School of International Studies Ajou University
- Publication Year
- 2015-02
- Language
- eng
- Alternative Abstract
- This research is two-pronged; first, critically analyzing and confirming the positive relationship between Foreign Direct Investment(FDI) and economic growth and secondly, emphasizing the dominance of FDI over Official Development Assistance(ODA) in ensuring long-term and sustainable economic growth and development. As opposed to other Development research, this piece of work recognizes the role of Foreign Aid in setting the ground work for development especially in the domain of infrastructure in developing countries. Though Foreign Aid lays the foundation for development, it doesn’t have the ability to sustain this development in the long-run. On the other hand, FDI is able to provide sustainable development in developing countries through spillover effects such as employment creation, technological transfer, on-the-job training as well as market expansion and efficiency creation through competition with existing firms. The general theory here is, Foreign Aid creates an attractive economic environment to foreign investors by ensuring local infrastructural development and raising the country’s living standard and GDP to an encouraging level. Once this has been achieved, foreign investment inflow is then necessary to build up the economy, taking in to a path of long-term sustainability. FDI is therefore a fill-the-gap for ODA. With focus on the economy of Cameroon, this research details the current economic and poverty situation in the country, bringing out the various strategies which have been adopted by the government such as the 2003 Poverty Reduction Strategy Paper(PRSP) and its failures as well as the current Growth and Employment Strategy Paper (GESP). An analysis of the foreign aid situation of Cameroon is done here, bringing out its reasons for failure which have been driven by the rampant mismanagement and lack of accountability as well as the endemic corruption in the country. Some supporting theories of FDI such as; the Product life cycle theory, the factor proportion theory, the absolute advantage theory and the direct investment theories are included here in order to further strengthen the argument of a positive relationship between FDI and Economic growth. An analysis of the FDI, ODA and GDP trends in the country is carried out for the period 2004-2012. This analysis shows a highly fluctuating but overall positive trend in the country’s GDP and ODA for the period 2004-2008, while FDI was on the low. These variables all experience a massive decline in 2009 due to the financial crisis faced by the country during that year. The aftermath of the crises till date, show a rise in FDI and GDP trends, leaving ODA on a fluctuating low level. The analysis is narrowed down to the electricity sector in the country which has seen a significant rise in FDI in recent years. The analysis of this sector shows its creation with ODA, detailing its declining growth process over the years until 2001 which is the tipping point in which the sector was privatized and handed over to the FDI sector to ensure efficiency in production and growth.
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