<p>Foreign direct investment (FDI) is an important source of external finance for developing countries. In the West African Economic and Monetary Union (WAEMU) region, FDI has experienced a relatively uneven development in recent years. However, it can have a significant impact on the host economies, including crowding in or displacing domestic investment. The effect of FDI on domestic investment is influenced by a wide range of factors, including competition regime, economic policy, level of technology, performance of domestic firms, and governance.</p>