Foreign Direct Investment in Regional Integration: Comparative Attractiveness in the CEMAC and UEMOA Economic Spaces

The competition or complementarity of foreign direct investment (FDI) attractiveness between economically similar regions located in the same continent has not yet been up to now sufficiently explored in the literature. The purpose of this paper is consequently to contribute to this literature by determining whether or not there exists a long-term relationship between FDI flows in the CEMAC and UEMOA regions of Central and West Africa. This hypothesis is tested in both economic spaces using a Vector Autoregression (VAR) model. The study shows that the FDI flowing in the UEMOA zone directly attracts FDI flows in the CEMAC zone. These inflows improve the business environment in both regions. Overall, the study however finds that the long-term relationship which exists between these two regions is inclined to be more competitive rather than complementary.