Regional Trade, Foreign Direct Investment and Economic Growth in the Southern Africa Development Community Region

Thomas Mwimba Messomo Elle Serge
Abstract
The main objective of this study was to determine the impact of Regional trade on the economic growth in Southern Africa Development Community (SADC) mediated by Foreign Direct Investment (FDI). This study employs the Pooled Mean Group (PMG) estimator on data spanning the period 1990 to 2020 for 9 selected countries in the Southern African Development Community (SADC). The results show that regional trade limits economic growth and FDI in the short run but enhances economic growth and FDI in the long run. Furthermore, FDI is detrimental to economic growth in the long run even though it is not significant. However, in the short run it has a growth enhancing effect even though it is not significant. We therefore, conclude that FDI does not mediate the impact of regional trade on economic growth in the SADC region. Hence, governments in the SADC region should not rely on inward FDI as a means of boosting their economies. The study further recommends that governments in the SADC region should progressively eliminate tariffs and non-tariff barriers to foster intra-SADC trade as a mechanism for achieving sustainable economic growth in the long run.
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ISSN(Online): 3065-176X

Frequency: Semiannually

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