FOREIGN DIRECT INVESTMENT, ECONOMIC GROWTH AND DIVERSIFICATION IN SUB-SAHARAN AFRICA A Country-Specific Analysis of Angola

Orientação: Eduardo Moraes Sarmento

Programa de Doutoramento: Economia Política: Doutoramento Interdisciplinar

This thesis examines the relationship between Foreign Direct Investment, economic growth and economic diversification in Sub-Saharan Africa, with a specific focus on Angola. Although Foreign Direct Investment is often regarded as a driver of capital accumulation, technology transfer, productivity growth and structural transformation, the Angolan experience shows that these effects are not automatic. Since the end of the civil war in 2002, Angola has attracted significant foreign capital, yet its economy has remained highly dependent on oil, with limited export diversification, weak domestic productive linkages and heightened vulnerability to international commodity shocks. The thesis addresses the following central question: to what extent does Foreign Direct Investment contribute to economic diversification and structural transformation in Sub-Saharan Africa, and does Angola exhibit dynamics that differ from the broader regional pattern? The theoretical framework integrates neoclassical growth theory, endogenous growth theory, institutional economics, rentier state theory, the resource curse literature, and the political economy of structural transformation. Methodologically, the research adopts a hypothetical-deductive approach, combining bibliometric analysis, Angola's historical-institutional analysis and panel data econometrics. The empirical analysis covers Sub-Saharan African countries over the period 2002-2021. It applies Pooled Ordinary Least Squares, Fixed Effects and Random Effects models, complemented by model selection tests and robustness procedures. Economic diversification is measured using the Export Diversification Index, allowing the study to assess whether Foreign Direct Investment reduces export concentration or reinforces sectoral dependence. The findings indicate that, in aggregate, Foreign Direct Investment does not necessarily operate as an automatic engine of diversification. In resource-dependent economies such as Angola, foreign investment may reinforce enclave production structures, export concentration and growth without structural transformation. The main contribution of this thesis lies in demonstrating that the relationship between Foreign Direct Investment, growth and diversification is institutionally mediated and politically conditioned. From a policy perspective, the thesis argues that Angola and other Sub-Saharan African economies should move beyond attracting larger volumes of foreign investment and prioritise its developmental quality, institutional embeddedness and capacity to generate domestic productive linkages.

Keywords: Foreign Direct Investment; Economic Growth; Economic Diversification; Institutions; Angola.