Structural vulnerability, economic resilience and attractiveness of foreign direct investment in WAEMU countries

Abstract

The objective of this article is to analyse the interactions between structural vulnerability, economic resilience and the entry of FDI into WAEMU countries. Based on an empirical analysis based on a Var panel, covering the period 2002 to 2021, our estimates show that FDI and economic resilience have positive interactions. The results indicate that economic resilience positively affects FDI, whereas structural vulnerability negatively affects FDI inflows. The robustness tests performed by the Generalized Moments Method (GMM) in system, to correct the problem of endogeneity of variables, confirmed the results obtained with the Var panel. These results imply that strengthening economic resilience through policies that enable more sustained and sustainable economic growth rates allows more FDI entry. These results also encourage greater macroeconomic stability and trade openness.