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COVID-19 Working Paper: The COVID-19 Pandemic and Changes in Greenfield Foreign Direct Investment in Africa

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  • Farris, Jarrad
  • Morgan, Stephen
  • Johnson, Michael E.

Abstract

Africa is expected to be a key emerging market for international trade and investment due to rising consumer incomes and a population that is projected to double in size by 2050. However, the Coronavirus (COVID-19) pandemic led to major disruptions to markets and incomes in Africa that may have altered companies’ investment decisions. This paper addresses this issue by evaluating how the COVID-19 pandemic may have shifted trends in greenfield foreign direct investment (GFDI) in the region. The authors examined changes in the magnitude and composition of GFDI in Africa coinciding with the pandemic. The authors found that the onset of the pandemic in 2020 is associated with a large drop in GFDI in Africa. This reduction has been relatively persistent—while GFDI in Africa increased moderately in 2021 relative to 2020, it remains below historical levels. The authors also found substantial sector-specific variations coinciding with the pandemic. For example, GFDI in the food and beverages sector declined 34 percent in 2020 (relative to its 2010–19 annual average), while the communications sector experienced a more than 100-percent increase in 2020 GFDI. Finally, the authors found no association between countries’ differing COVID-19 fiscal policy responses and GFDI in the short term.

Suggested Citation

  • Farris, Jarrad & Morgan, Stephen & Johnson, Michael E., 2022. "COVID-19 Working Paper: The COVID-19 Pandemic and Changes in Greenfield Foreign Direct Investment in Africa," USDA Miscellaneous 329078, United States Department of Agriculture.
    • Handle: RePEc:ags:usdami:329078
    DOI: 10.22004/ag.econ.329078
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    References listed on IDEAS

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