The Differential impact of Foreign Direct Investment on Economic Growth between Landlocked and Coastal African countries

The Differential impact of Foreign Direct Investment on Economic Growth between Landlocked and Coastal African countries | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article The Differential impact of Foreign Direct Investment on Economic Growth between Landlocked and Coastal African countries Ashenafi Mola (Mr), PhD candidate in Development economics, Semeneh Bessie (PhD), and 1 more This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9107286/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract The main motivation for this study is to determine why foreign direct investment does not produce the same level of growth in African countries. Specifically, it investigates whether being landlocked or having coastline access fundamentally changes how inflows of FDI translates into short and long run growth, a critical question for designing effective continental investment policy. The relationship between foreign direct investment and economic growth is a topic that sparks debate and needs further exploration. This study explains the differential impact of foreign direct investments on growth of landlocked versus coastal African countries during 1996 to 2023. We utilized a Panel Autoregressive Distributed Lag model alongside Pool Mean Group estimation, complemented by Pedroni and Kao co-integration methods and panel causality tests. The results show a stable long-run relationship between net foreign investment inflow and growth in both groups of countries. Specifically, a 1% increase in FDI results in a 1.44% rise in real GDP for coastal nations, compared to a mere 0.26% increase for landlocked countries, leading to a growth disparity of 1.18%. This analysis emphasizes the importance of considering geographical factors when exploring the relationship between foreign direct investment and economic growth. It also highlights the necessity for targeted economic policies to address the distinct challenges and opportunities that landlocked and coastal African nations encounter. Hence Landlocked African countries must compensate for geographic constraints through infrastructure, strong institutions, regional cooperation, and human capital development. Development Economics Economic growth Investment Coastal Landlocked Panel Data Analysis Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9107286","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":605230807,"identity":"cb503fab-bb77-4184-8e96-4b790e5fa438","order_by":0,"name":"Ashenafi Mola (Mr), PhD candidate in Development economics","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABBklEQVRIiWNgGAWjYFACHhAhBySZGxgkKmyAHMbGA0RoMQaSjA0MFmfSQFoaiNICVslQ2XIYLIZXC3//2YOPC2oMZHTbGxs/3Gw4b7e2/TDQlhqbaFxaJG7kJRvPOGbAY3bmYLPkzB23k7edSQRqOZaW24BLzw0eM2ketj88ZjcSG6Qlz9xONjsA1MLYcBinFvnzZ8x/8/wzAGlp/v237Vyy2fmH+LUYHMgxY+ZtA2tpk5BsO2AHsg6vFsMbOcbSvH1gv7RZSJxJTjC7AbQlAY9f5M6fMfzM883A3ux48+EbEhV29mbn0x8++FBjg9v76CARrDKBWOUgYE+K4lEwCkbBKBgZAADUkmZS3c+fFwAAAABJRU5ErkJggg==","orcid":"","institution":"Ethiopian civil Service University","correspondingAuthor":true,"prefix":"","firstName":"PhD","middleName":"candidate in Development eco Ashenafi Mola","lastName":"(Mr)","suffix":"PhD"},{"id":605230808,"identity":"71afbd1d-b28e-4a40-a3d1-df5dd9450314","order_by":1,"name":"Semeneh Bessie (PhD)","email":"","orcid":"","institution":"Ethiopian civil Service University","correspondingAuthor":false,"prefix":"","firstName":"Semeneh","middleName":"","lastName":"Bessie","suffix":"PhD"},{"id":605230809,"identity":"7889feea-0703-4628-8393-71ccc41280bf","order_by":2,"name":"Tesfaye Chofana (PhD)","email":"","orcid":"","institution":"Ethiopian civil Service University","correspondingAuthor":false,"prefix":"","firstName":"Tesfaye","middleName":"","lastName":"Chofana","suffix":"PhD"}],"badges":[],"createdAt":"2026-03-12 17:19:51","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-9107286/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9107286/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":104782255,"identity":"7be0555d-2eab-44aa-98bb-2f7ef2208c4f","added_by":"auto","created_at":"2026-03-17 07:57:03","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":586673,"visible":true,"origin":"","legend":"","description":"","filename":"TheDifferentialimpactofForeignDirectInvestmentonEconomicGrowthBetweenLandlockedandCoastalAfricancountries.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9107286/v1_covered_2c85b88c-a8ac-40fe-b8b4-9c41e4a58757.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003e\u003cstrong\u003eThe Differential impact of Foreign Direct Investment on Economic Growth between Landlocked and Coastal African countries\u003c/strong\u003e\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Economic growth, Investment, Coastal, Landlocked, Panel Data Analysis","lastPublishedDoi":"10.21203/rs.3.rs-9107286/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9107286/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThe main motivation for this study is to determine why foreign direct investment does not produce the same level of growth in African countries. Specifically, it investigates whether being landlocked or having coastline access fundamentally changes how inflows of FDI translates into short and long run growth, a critical question for designing effective continental investment policy. The relationship between foreign direct investment and economic growth is a topic that sparks debate and needs further exploration. This study explains the differential impact of foreign direct investments on growth of landlocked versus coastal African countries during 1996 to 2023. We utilized a Panel Autoregressive Distributed Lag model alongside Pool Mean Group estimation, complemented by Pedroni and Kao co-integration methods and panel causality tests. The results show a stable long-run relationship between net foreign investment inflow and growth in both groups of countries. 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