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The Impact of FDI Repatriation on Economic Growth in West Africa: A Comparative Analysis of Nigeria and Regional Counterparts (2000–2024)

This study investigates the dynamic relationship between Foreign Direct Investment (FDI) repatriation and economic growth in seven West African countries, Nigeria, Ghana, Côte d’Ivoire, Senegal, Burkina Faso, Mali, and Benin, over the period from 2000 to 2024. Although prior research has extensively examined the advantages of FDI inflows, the precise effects of profit repatriation by foreign investors remain insufficiently studied, particularly within the West African setting. We employ a Vector Autoregression (VAR) framework to capture the dynamic interactions between FDI repatriation and GDP growth while addressing potential endogeneity. Annual data are sourced from the World Bank, the International Monetary Fund, and the United Nations Conference on Trade and Development. Our central hypothesis proposes that FDI repatriation exerts a negative impact on GDP growth in the short term, with effects that may weaken over time. The findings corroborate a unidirectional Granger causal relationship from FDI repatriation to GDP growth. Impulse response functions indicate that a one-standard-deviation shock to FDI repatriation decreases GDP growth by approximately 0.3 percentage points after one year, and this effect becomes statistically insignificant after three to four years. According to variance decomposition, FDI repatriation accounts for roughly 14.1 percent of the variation in GDP growth after ten periods, a share more than twice that of FDI inflows. A country-specific analysis for Nigeria indicates a somewhat subdued effect, with a maximum decrease of 0.2 percentage points, which implies greater resilience relative to regional peers. This research is distinguished by its comparative quantification of repatriation effects across heterogeneous West African economies. The results carry substantial policy implications, indicating that balanced FDI policies that promote local reinvestment and strengthen domestic financial markets can reduce the short-term growth costs of profit repatriation.