Abstract

The objective of this study was to contribute to a better understanding of the effect of economic freedom on FDI in Togo. We used data ranging from 1996 to 2021 and applied an autoregressive distributed lag (ARDL) model to analyze the short and long-term dynamics between FDI and the index of economic freedom, as well as other relevant explanatory variables. The tests carried out revealed the existence of a cointegrating relationship between FDI and the explanatory variables. In the short term, economic freedom has a positive impact on FDI, although this effect tends to diminish in the long term. In addition, other factors such as inflation, corruption, labor productivity and government spending have been identified as significant determinants of FDI.

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