Authors: Sheereen Fauzel; Leenum Keesoonah
Addresses: Department of Finance and Accounting University of Mauritius, Reduit, Mauritius ' Department of Finance and Accounting University of Mauritius, Reduit, Mauritius
Abstract: Given that literature remains open to doubt concerning the impact of foreign direct investment (FDI) on growth, this paper attempts to place the discussion of the sectoral impact of FDI on the sectoral growth of Mauritius in the short, and long term. For this purpose, the autoregressive distributed lag (ARDL) approach is applied on time series data over the period 1990 to 2013 to assess the impact of FDI on the growth of the secondary and tertiary sectors. This paper shows that in the manufacturing industry which is a proxy used for the secondary sector, FDI benefits the industry's growth more in the long term rather than in the short term. In wholesale and retail trade industry of the tertiary sector, FDI exerts significant positive impact both in the short and long term industry growth. The CUSUM and CUSUMQ tests confirm the structural stability of the two formulated models. Moreover, using a descriptive analysis, it has been noted that the primary sector does not attract much FDI.
Keywords: FDI; foreign direct investment; Mauritius; autoregressive distributed lag; ARDL; sectoral growth.
African Journal of Economic and Sustainable Development, 2017 Vol.6 No.1, pp.32 - 51
Received: 12 Nov 2015
Accepted: 20 May 2016
Published online: 12 Mar 2017 *