The impact of FDI, savings and the current account on indigenous investments in Senegal

Abstract

The objective of this article is to analyze the impact of Foreign Direct Investments (FDI), domestic savings and the Current Transaction Balance (BTC) on the level of investment in Senegal. This research uses the ordinary least squares method and the error correction method. It thus uses data from the World Bank website. The results of the first method show that FDI (inward) and savings significantly and positively affect Senegalese investment. In contrast, those of the second method shows that savings and inward FDI have positive long-term effects on the level of local investment even if it is only the effect of savings that is significant. In other words, the Senegalese authorities must encourage domestic savings and harmonize institutions for a better attraction of FDI. This paper finds its originality in the combination of the two methodologies and but also in the separation of incoming and outgoing FDI.