FDI and Economic Growth in Côte d’Ivoire: An Empirical Analysis Based on the Service Sector

Abstract

This paper analyzes the contribution of FDI to service sector growth in Côte d’Ivoire over the period 1980-2021. The data are extracted from World Development Indicators (World Bank). The econometric test based on the ARDL cointegration approach is used. The results show that FDI has a negative and significant effect on growth in the service sector. These results could be explained by the insufficiency of inward FDI in Côte d’Ivoire in recent years, compared to other sub-Saharan African countries, by the sectoral allocation of inward FDI, which does not take into account the growth sector of the economy, and finally, by the unbalanced geographical distribution of FDI, most of which is heavily concentrated in Abidjan. Our results highlight the importance of boosting investment in the service sector, in order to stimulate activities in this sector in Côte d’Ivoire. Besides aiming at creating a solid national economy and improving living standards, we suggest the mobilization of sufficient domestic savings and raising the level of education, developing infrastructure in sufficient quantity and quality and increasing internal and external trade flows, and finally, preserving the population’s purchasing power. We have also proposed measures to improve FDI to promote economic growth in Côte d’Ivoire’s service sector.