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Locational determinants of us outward fdi into sub-saharan Africa

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  • Godwin Okafor

    (Bournemouth University, UK)

Abstract

This paper uses panel data techniques to investigate the locational determinants of US outward foreign direct investment (FDI) into 23 countries of Sub-Saharan Africa (SSA) for 1996–2010. The findings revealed that US outward FDI into SSA is influenced by the availability of crude oil and natural gas, infrastructure development, market size and completion rates in primary education. Conversely, labor force (of those aged 15+) and inflation deter US FDI, while political instability, corruption, and the exchange rate have an insignificant negative relationship with US FDI. These findings suggest that US investors investing in SSA are significantly influenced by resource and market seeking factors but not by efficiency seeking factors. The study therefore suggests that credible policies for attracting US investors into SSA countries should be relentlessly pursued through education, training and skills acquisition, inflation targets, trade openness (especially in the natural resource sector), corruption control and political stability.

Suggested Citation

  • Godwin Okafor, 2015. "Locational determinants of us outward fdi into sub-saharan Africa," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(1), pages 187-206, January-M.
    • Handle: RePEc:jda:journl:vol.49:year:2015:issue1:pp:187-206
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    Cited by:

    1. Seth Nana Kwame Appiah-Kubi & Karel Malec & Sandra Boatemaa Kutin & Mansoor Maitah & Michael Chanda Chiseni & Joseph Phiri & Zdeňka Gebeltová & Sylvie Kobzev Kotásková & Kamil Maitah, 2020. "Foreign Ownership in Sub-Saharan Africa: Do Governance Structures Matter?," Sustainability, MDPI, vol. 12(18), pages 1-15, September.
    2. Avom Désiré & Melingui bate Adalbert Abraham Ghislain, 2020. "The effect of information and communication technologies on foreign direct investments attractiveness in Africa," Economics Bulletin, AccessEcon, vol. 40(3), pages 2304-2319.
    3. Ling Liu & Jose Godinez & John Henley & J. Mauricio Galli Geleilate, 2023. "Corruption distance and the equity-based foreign entry strategies of multinational enterprises in sub-Saharan Africa," Journal of International Business Policy, Palgrave Macmillan, vol. 6(4), pages 492-510, December.
    4. Bruno Emmanuel Ongo Nkoa & Jacques Simon Song, 2017. "Analyse des effets de la qualité des institutions sur la volatilité des Investissements Directs Etrangers en Afrique," African Development Review, African Development Bank, vol. 29(4), pages 674-688, December.
    5. Ethel Ansaah Addae & Dongying Sun & Olivier Joseph Abban, 2023. "Evaluating the effect of urbanization and foreign direct investment on water use efficiency in West Africa: application of the dynamic slacks-based model and the common correlated effects mean group e," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 5867-5897, July.
    6. Oro, Oro Ufuo & Alagidede, Imoptep Paul, 2021. "Does petroleum resources or market size drive foreign direct investment in Africa? New evidence from time-series analysis," Resources Policy, Elsevier, vol. 71(C).
    7. George Owusu-Antwi & Dwobeng Owusu Nyamekye & Patrick Ofei & Frederick A. Aikens, 2019. "Foreign Direct Investment: Is Natural Resources the Rejoin? Evidence from Ghana, Nigeria, and Togo: Fixed Effect Approach," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 9(12), pages 588-606, December.
    8. Vibha Kapuria-Foreman, 2022. "Foreign direct investment and natural resources," Economics Bulletin, AccessEcon, vol. 42(4), pages 2200-2213.
    9. Kimiagari, Salman & Mahbobi, Mohammad & Toolsee, Tushika, 2023. "Attracting and retaining FDI: Africa gas and oil sector," Resources Policy, Elsevier, vol. 80(C).

    More about this item

    Keywords

    FDI; US FDI; Sub-Saharan Africa (SSA); Resource Seeking; Market Seeking; Efficiency Seeking;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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