Foreign Direct Investment and International Trade in Africa

Foreign direct investment (FDI) and international trade have been on the rise in Africa in recent years following trade liberalization of most African economies. FDIs and trade have contributed to an increase in investments, capital formation, exchange rate stability, economic growth, and economic development in Africa. This chapter provides an understanding of FDI and trade relationships drawing on the empirical and theoretical literature as well as the experience of African countries. We discuss the various theories of FDI flows as well as trade flows. The chapter provides an overview of FDI and trade in Africa. The chapter also discussed the drivers of FDI and trade in Africa and provided stylize facts on FDI and trade in Africa. The chapter also discusses the contributions of FDIs and trade to economic growth and development in the region and the roles governments play in FDI flows and trade.