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Foreign Direct Investment in Africa

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  • Anupam Basu
  • Krishna Srinivasan
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    Abstract

    This paper reviews the experiences of a few countries in Sub-Saharan Africa that have succeeded in attracting fairly large amounts of foreign investment. The review indicates that sustained efforts to promote political and macroeconomic stability and implement essential structural reforms have been the key elements contributing to the success that certain countries in Africa have achieved in attracting a substantial volume of FDI. Strong leadership, which has helped promote democracy and overcome social and political strife, and a firm commitment to economic reform have been important determinants. The adoption of sound fiscal and monetary policies, supported by an appropriate exchange rate policy, and a proactive approach to removing structural impediments to private sector activity have had a positive bearing on investor sentiment. The analysis underscores the importance of relying on stability and a broad-based reform effort to encourage foreign investment in Africa.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 02/61.

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    Length: 41
    Date of creation: 01 Apr 2002
    Date of revision:
    Handle: RePEc:imf:imfwpa:02/61

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    Keywords: Foreign direct investment; Economic reforms; fdi; foreign investment; investors; foreign investors; direct investment; tax incentives; investment promotion; macroeconomic stability; investment location decisions; private investment; investment promotion agency; investment decisions; export processing zones; manufacturing sector; foreign currency; joint ventures; host country; market size; multinational firms; host-country; direct investment inflows; foreign exchange; foreign private investment; international investment; investment flows; investment incentives; expropriation; investment protection; investment climate; bilateral investment; investment disputes; macroeconomic indicators; investment promotion agencies; investment activity; technology transfer; ipas; investment agreements; rates of return; investment code; investment promotion program; multilateral investment guarantee agency; institutional investors; investment risk; foreign investor; foreign investment flows; manufacturing sectors; investment guarantee agency; bilateral investment treaties; domestic fixed investment; investment policy; import duty exemptions; fixed investment; foreign exchange policies; regulatory barriers; judicial system; investment advisory services; tax rate; investment projects; investment requirements; tax regime; investor confidence; fixed capital; reinvestment; corporate tax; flow of capital; foreign-owned companies; global capital; institutional impediments; institutional development; gross fixed capital formation; regulatory framework; corporate tax rate;

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    Cited by:
    1. Faisal Ahmed & Rabah Arezki & Norbert Funke, 2007. "The composition of capital flows to South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(2), pages 275-294.
    2. Montfort Mlachila & Misa Takebe, 2011. "FDI from BRICs to LICs," IMF Working Papers 11/178, International Monetary Fund.
    3. James M. Boughton, 2005. "Does the World Need a Universal Financial Institution?," IMF Working Papers 05/116, International Monetary Fund.
    4. World Bank, 2008. "Guinea : Development Policy Review," World Bank Other Operational Studies 7871, The World Bank.
    5. Gehringer, Agnieszka, 2013. "Financial liberalization, financial development and productivity growth: An overview," Economics Discussion Papers 2013-46, Kiel Institute for the World Economy.
    6. Saleh M. Nsouli & Norbert Funke, 2003. "The New Partnership for Africa's Development (NEPAD) Opportunities and Challenges," IMF Working Papers 03/69, International Monetary Fund.
    7. Sunday Aninpah Khan, 2008. "Official Flows, Export Revenue, Volatility and Domestic Investment in Cameroon," The African Finance Journal, Africagrowth Institute, Africagrowth Institute, vol. 10(1), pages 72-88.
    8. Akinkugbe, Oluyele, 2003. "Flow of Foreign Direct Investment to Hitherto Neglected Developing Countries," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    9. Bezuidenhout, Henri & Naude, Wim, 2008. "Foreign Direct Investment and Trade in the Southern African Development Community," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2008/88, World Institute for Development Economic Research (UNU-WIDER).
    10. Norbert Funke & Faisal Ahmed & Rabah Arezki, 2005. "The Composition of Capital Flows," IMF Working Papers 05/40, International Monetary Fund.
    11. Dupasquier, Chantal & Osakwe, Patrick N., 2006. "Foreign direct investment in Africa: Performance, challenges, and responsibilities," Journal of Asian Economics, Elsevier, Elsevier, vol. 17(2), pages 241-260, April.

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