Effect of Foreign Direct Investments on Economic Growth in CEMAC Zone: Role of Human Capital

Abstract

The objective of this paper is to analyze the role played by human capital in the relationship of foreign direct investment (FDI) and economic growth in the Central African Economic and Monetary Community (CEMAC). To achieve the assigned goal, we use the generalized method of moments (GMM) in a dynamic panel system proposed by Blundell et al. (2012) on annual series of 50 by country (Cameroon, Congo, Gabon, CAR, and Chad)1 from 1970 to 20192. Two major conclusions emerged from this research. The first is that human capital in the CEMAC zone contributes significantly to improving the FDI-economic growth relationship. The second conclusion is that human capital has a negative and very significant effect on economic growth, all other things being equal. This result corroborates the threshold effect estimates that have shown that the CEMAC zone has not yet reached a level of human capital, enabling one to take advantage of the economic benefits specific to the return on investment in education or through spillovers.