Abstract

This study examines the relationship between Foreign Direct Investment (FDI) and import demand for 11 member countries of the Economic Community of West African States (ECOWAS) during the period 1970-2017. We employ a causality test based on Meta-analysis which considers the issues of cross-sectional dependency and slope heterogeneity among countries. The empirical findings indicate that the causal nexus between FDI and imports is one way running from imports to FDI. The results also reveal heterogeneity across countries in the causal nexus between FDI and imports. There is no evidence of causality between the two variables for seven countries while there is unidirectional causality from FDI to imports for two countries, and from imports to FDI for two countries.

Key words: imports, foreign direct investment, Granger causality, cross-sectional dependency, Economic Community of West African States (ECOWAS).