Foreign Direct Investments and Individual Income in Central Africa

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Abstract This article employs a panel of double ordinary least squares to verify the sensitivity of income per capita to the influx of foreign direct investment (FDI) in the Economic and Monetary Community of Central Africa (EMCCA). Equally, it uses the granger causality test based on the auto-regressive model, most especially the one recently developed by Toda and Yamamoto (1995) to establish the causality links between FDI and per capita income in the Economic and Monetary Community of Central Africa. Results obtained show that there exist a direct effect between FDI and income per capita in the entirety of EMCCA. The granger causality test shows contrarily that there is no link between FDI and income per capita in the EMCCA countries whereas the Toda-Yamamoto finds a symmetric link among these variables in Equatorial Guinea, a unidirectional link of FDI towards income per capita in Congo, Gabon and Chad; and no link between the variables in the Republic of Central Africa and Cameroon.


Keywords: FDI, income per capita, Mwald, bi-varied VAR, doubled Ordinary Least Squares

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