Unleashing technological advancements through foreign direct investments in West Africa's non-oil manufacturing sectors

Abstract

This paper explores the potential of Foreign Direct Investments (FDI) to drive technological advancements and promote sustainable growth in West Africa's non-oil manufacturing sector. The purpose of the study is to evaluate and ascertain the technological advancement that has been accompanied by FDI in West African countries. This study uses the FDI dataset of 5 West African countries and adopts the panel data analysis that spans from 1990 – 2022 to evaluate the factors that contribute to the diffusion and adoption of technological innovation. Data were sourced from the World Bank, International Monetary Fund, and Investment Promotion centers of selected countries. Findings from the study showed that factors that contribute to the diffusion and adoption of technological innovation come from FDI, political indicators, and Gross Domestic Product (GDP). Thus, there is a positive relationship between FDI and GDP on technological diffusion and adoption; the higher the FDI and GDP size the more improved the adoption and diffusion of technology in the specific market across the continent. The negative relationship between political stability and technology diffusion proves that the lower the occurrence of terrorism or political turmoil the higher the adoption of technology in manufacturing. The study recommends the need for governments to improve political stability and set up technology hubs and clusters to facilitate knowledge sharing and collaboration to absorb technology diffusion in their respective economies. JEL Codes: F2, L6, O33