Exploring the Relationship Between Trade Openness, FDI, and Economic Complexity in Africa

This study analyzes the relationship between trade openness, foreign direct investment (FDI), and economic complexity in 32 African economies from 1995 to 2018. Using pooled OLS, fixed effects, random effects, and GMM methods, it finds that trade openness negatively affects economic complexity, while FDI positively impacts it by fostering technology transfer and innovation. However, increased trade openness reduces the positive effect of FDI on economic complexity. These findings highlight the need for nuanced trade and investment strategies in Africa.