Although the predominant theoretical literature presumed foreign capital inflows to carry broad benefits to recipient nations, this assumption has been recently questioned in Guinea since the resulting GDP growth has weakly impacted social welfare. This empirical study offers a better insight of the extent to which foreign direct investment (FDI) influences economic growth in the Guinean context over the period 1990-2017. Fiscally, the per GDP FDI net inflows and GDP growth rate are respectively employed as FDI estimate and economic advancement indicator. The findings established in this study included: first, foreign direct investment in the long run positively affects economic advancement in Guinea at 1% significance level. This outcome suggests that 1% raise in FDI per GDP leads to 0.45 increase in GDP growth. Moreover, this finding is in line with the main literature related to foreign investment induced effects in Africa and other developing regions. Second, the short run coefficients suggest the same story exposed by the long run investigation. FDI per GDP [L1], [L2] positively and significantly influences economic growth in the Guinean context. Even though there is strong evidence that FDI positively affects growth in Guinea, government should consider the form of foreign investments to be promoted in the country. The study recommends that resource seeking type without transformation must be discouraged for the benefit of market or efficiency seeking investment. By doing so, Guinean economy will experience healthier and welfare enhancing growth.

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The recent economic and financial hardship has resuscitated controversies over the role of Foreign Capital in economic growth and welfare enhancement in emerging nations, particularly in Guinea. The literature that scrutinizes the causal interaction among FDI and poverty alleviation is relatively abundant, the fundamental statement shared by these empirical studies is that GDP growth is assumed to be relevant proxy of people well-being. However, Guinea and its FDI attraction policies have not been well approached by some of these paper. This empirical study examines the interaction between FDI inflows and poverty alleviation in Guinea from 1990 to 2017. The Human Development Index (HDI) and the per capita FDI net inflows are respectively employed as key welfare and FDI indicators.The findings from the Error Correction Model (ECM) confirm that, in the long term the variables converge in the same direction. The outcomes also exhibit that per capita FDI in the long run, negatively impacts welfare but not significantly, while Inflation’s coefficient remains positive and significant. With trade openness, we still found the same positive interaction but not significant. The results from the Auto Regressive Distributed Lag Model (ARDL) exhibit that per capita FDI flows [current value and L2.] have positive but not significant impact on HDI whereas FDI [L1] has a negative interaction with welfare at 10% significance level. The trade openness variable [current value] is negatively but not significantly associated with HDI, while inflation [L1 and L2] influence on human advancement is positive and significant.Overall, Foreign direct investment in Guinea is still resource seeking investment which impact on the domestic economy is very limited. Hence, government should introduce new policies and incentives in order to attract more market seeking or other types of FDI that may promote inclusive growth and alleviate poverty.

This study shed light on the extent to which foreign direct investment contribute to employment in Guinea. FDI per GDP net inflows and unemployment rate are adopted as key indicators whereas inflation, trade openness, credit to private sector are control variables.  The empirical evidence is computed through ARDL method and the subsequent findings are established: first, foreign investment negatively and insignificantly affects unemployment in the short run. This result may be linked to the fact that a huge portion of FDI in Guinea is resource seeking type which itself does not generate enough jobs in the affiliate firms. Moreover, the interactions between such kind of investment and local suppliers are very limited, mitigating its effect on employment in the supplier’s side. Second, the short term coefficients for inflation and credit to private sector are positive and insignificant, contradicting a popular macroeconomic theory known as Phillips curve.   Overall, government should promote investments that can have transformative effect on domestic economy through linkages and spillovers. Furthermore, special emphasis must be put on human capital (education and healthcare) so that Guinean youth could be more competitive and capable to seize job opportunities offered both by foreign multinationals and local firms.  

This essay provides a better comprehension of the other disregarded impacts of FDI by examining first, the causality direction then the long- and short-term interaction among inward FDI and financial development in Guinea using 1990-2017 data set. The empirical assertions are grounded on the Granger causality wald test, Bounds test for co-integration, Error correction model (ECM) and the Auto regressive distributed lag (ARDL) framework. FDI per GDP net inflows and Credit to private sector are respectively adopted as FDI measure and financial advancement indicator. The following outcomes are established: first, FDI in the long term negatively influence financial advancement in Guinea at 5% magnitude. This inference indicates that 1 percent surge in FDI per GDP induces 0.389 decrease in credit to private sector. Second, FDI per GDP [L1] negatively and significantly interact with financial advancement in the short term. Suggesting that 1 percent increase in FDI in the short term engenders 0.215 decrease in credit to private sector. Third, the causality direction remains unidirectional irrespective to the number of lags. Finally, the long- and short-term coefficients tell us the same story regardless of the time effects. Overall, contrary to the common perceptions, we found strong evidence that foreign investment does not enhance financial development in Guinea. In terms of practical implications, it seems ineffective to use FDI as financial advancement instrument within the Guinean context.