Since the late 1980s, most developing countries, particularly those of the WAEMU were faced with large imbalances in their balance of payment. This imbalance is characterized by inadequate domestic resources to the needs of funding. Hence the recourse to foreign capital mainly foreign direct investment (FDI) as new source of funding.
This study aims to identify the factors explaining of FDI inflows, as well as the impact of the FDI on the economic growth in WAEMU, having controlled the usual determinants of the economic growth, and the effect return of the economic growth on the foreign direct investments. The study covers the period 1980-2008, corresponding to the phase of adoption of structural adjustment, liberalization and scarcity of official development assistance.
After theoretical and empirical discussion on the determinants of FDI and their impacts on the economic growth of host countries, a structural model to simultaneous equation was built to highlight the interactions between FDI and economic growth in WAEMU.
The results of econometric estimates show that economic growth constitutes a main determinant factor in attracting FDIs, but FDIs are a minor determinant factor of the economic growth. This leads to the economic policy implications for enabling fireball to make more attractive business environment of the Union to attract more foreign direct investments.
Keywords : WAEMU, foreign direct investment, economic growth, attractiveness, impacts, determinants.