The role of foreign direct investment in the process of industrialization of West Africa countries

The study sets out to look at the role of FDI in the process of industrialization of West Africa. In pursuit of this, the main question that the study seeks to find answer to is how does FDI affect industrialization of West Africa? To find answer to this main question, the study asks three questions which are: what is the effect of FDI on industrialization of West Africa? Does institutional quality moderates the relationship between FDI and industrialization of West Africa? What is the trend of FDI inflows into West Africa in the decade from 2011 to 2020? The study addresses these questions by employing the quantitative research approach and the explanatory research method. The study utilizes data on countries in West Africa, out of which one country is excluded for not having data on some indicators, leaving 15 countries. The twostep system GMM estimation strategy as well as trend analysis are employed to analyze the data. The study finds that FDI has no significant link with industrialization. Moreover, the study reveals that institutional quality does not moderate the relationship between FDI and industrialization. Additionally, it emerges that the trend of FDI inflows into the West African region during the period from 2011 to 2020 is more of a W-shape trend, with downward and upward patterns. The study concludes that FDI is not a major determinant of industrialization of the West African region, even though it may be a major determinant in other regions. Additionally, the study concludes that the quality of institutions in the West African region exert no influence on the relationship between FDI and industrialization of West Africa. The study recommends that governments in the West African region should focus on developing policies that provides fertile grounds for FDIs to flow into sectors of the economy that can contribute to the process of industrialization of the region, such as tax incentives for industry-based FDIs. Additional recommendation is made that governments within the West African region should focus attention on strengthening the robustness of institutions to effectively drive the inflow of industry-based FDIs since the quality of institutions is one of the key factors that investors consider in deciding on whether to invest in an economy or otherwise.