Abstract:

The African region has been characterised with relatively increased inflows of foreign investment, however, no visible improvement in domestic investment, growth indicators, and development is patently seen in the sub-regions. Though, it has been said that, countries that have accessed flow of foreign capital have done better than countries that have not in terms of improvement in per capita income and standard of living, countries that grew quicker has been those that were less reliant on inflow of foreign capital. The study examined the sub- regional analysis of inflow of FDI to the African regions as well as the impact that it has had on economic development of the region paying particular attention to the various degree of inflow to sub-regions. The study made use of pooled data from thirty nine African countries within the period 1993 and 2012.The method of analysis utilized for the study was the fixed effect least-square dummy variable model, employed to estimate the impact of foreign direct investment on economic development considering a sub-regional analysis and highlighting the impact on sub-regions. The study finds that foreign direct investment is statistically significant in relation to economic development for sub-regions of African with lesser flows of fund. It is therefore recommended that the governments of host countries should consider closely the sectors that FDI flows into, also, they should discourage the displacement of domestic competitors, thereby giving room for economic activities to thrive domestically in such sectors such that dependence on external financial flows could be gradually reduced, resulting in gradual reduction in the gaps of savings, investment which characterizes the developing economies like Africa, thereby, aiding desired economic development.