Trade openness, foreign investment, and Africa’s repositioning in the global economy

Abstract This paper examines the relationship between trade integration, foreign direct investment (FDI), and economic performance in selected African economies over the period 2000–2024. Using panel data from the World Development Indicators for eight African countries, the study investigates whether the association between trade integration and FDI has evolved in the recent global context characterized by heightened geopolitical tensions, supply chain reconfiguration, and the operationalization of the African Continental Free Trade Area (AfCFTA). Employing fixed-effects panel estimations with country and year effects, and implementing wild cluster bootstrap inference to address the limited number of cross-sectional units, the analysis finds a positive within-country association between trade integration and FDI inflows. However, the evidence does not provide statistically robust support for a structural shift in this relationship in the post-2021 period. Additional estimations examining the link between lagged FDI inflows and GDP per capita growth suggest a positive association, although the magnitude of the effect remains sensitive to small-sample inference. By focusing on conditional relationships rather than aggregate narratives of transformation, the paper contributes to the literature on Africa’s integration into the global economy. The findings highlight the structural importance of trade integration as a background condition for investment attractiveness, while underscoring the need for complementary domestic policies and institutional stability to support sustained investment and development outcomes. These results offer nuanced insights for policymakers seeking to strengthen Africa’s position within evolving global production and investment networks.