This study investigates the role of foreign direct investment on growth in developing countries. Theories on FDI channels have been explored but more emphasis has been put on finance to examine how it links FDI to growth of host economy. It has been found that well-organized financial system attracts FDI and permits it to contribute to local capital accumulation and investment while poor system creates frictions towards economic growth. For SSA, the attraction of FDI should be treated with care to control for FDI negative externalities amplification since the financial system in this region is fragile vis-à-vis foreign presence.
- Foreign Direct Investment