THE NEXUS BETWEEN FOREIGN DIRECT INVESTMENT AND INDUSTRIALISATION. A PANEL ANALYSIS OF THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS)

Foreign direct investment and industrialization are powerful tools that can transform economies and aid in the attainment of selected Sustainable Development Goals. This study aimed to examine the relationship between foreign direct investment and industrialization in the ECOWAS trading bloc. Drawing on panel data from 1975–2022, sourced from the World Bank portal, the study employed a panel auto-regressive distributive lag model. Research findings depicted that foreign direct investment had a negative effect on industrialization. Primary research findings found that ECOWAS suffers from low industrialization and FDI levels. In the short run, it was observed that GDP per capita positively influenced industrialization levels in the ECOWAS region. In the long run, trade and gross fixed capital formation positively impacted industrialization levels. In terms of policy implications, it was suggested that there is a need for ECOWAS to craft and implement robust trade policies, solve governance issues, and increase investment in gross fixed capital.