The Impact of Foreign Direct Investment on Angola's Economic Growth (2014-2023)

Abstract

Foreign Direct Investment (FDI) is often considered an engine of economic growth in developing countries, due to its capacity to transfer technology, generate employment, and boost productive sectors. Therefore, this study aims to analyze the impact of Foreign Direct Investment (FDI) on the growth of the Angolan economy from 2014 to 2023. To test the hypothesis, a Linear Regression model was used, considering a Multiple econometric model based on Vector autoregressive, which expresses the relationship between FDI, exchange rate, trade balance, and Angola's GDP from 2014 to 2023. The results indicate that FDI did not have a positive and significant impact on GDP growth.
The FDI coefficient showed a negative value (-0.23), meaning that an increase in FDI did not directly translate into economic growth during the analyzed period. However, it is concluded that Angola's economic environment was unfavorable during the period, which contributed little to attracting FDI. This conclusion is consistent with the assumptions presented. Therefore, the increase in Foreign Direct Investment (FDI) in Angola between 2014 and 2023 did not have a significant impact on the country's economic growth.
Despite the influx of FDI, internal and external factors neutralized its positive impacts on the Angolan economy during the period 2014-2023. Global events, such as health and economic crises, can influence investment decisions. For this to translate into effective benefits, it is necessary to redirect investment towards strategic non-oil sectors, strengthen local absorption capacities, and ensure greater macroeconomic and institutional stability. Therefore, future research should consider these impacts to better understand how foreign investment reacts to these challenges.