The Role of Institutional Quality in FDI Inflows in Sub-Saharan Africa
AbstractDuring the period 2000 to 2008, Africa’s collective GDP grew at an annual rate of 4.9 percent. Even though previous studies argue that strengthened and improved institutional quality is key determinant for attracting foreign direct investment to Africa, we find no evidence to that effect. Using a panel data for 45 Sub-Saharan African countries (SSH), we estimate the role of institutional quality (governance) in attracting FDI inflow during the 1996-2007 period. After controlling for country and time specific effects and the economic environment of the host country, we find no significant evidence of the impact of institutional quality on FDI inflow in our analysis. This finding may suggest that FDI inflow to SSH is potentially motivated by the abundance of raw materials and natural resources than good governance.
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Bibliographic InfoPaper provided by Regional Research Institute, West Virginia University in its series Working Papers with number 201103.
Length: 22 pages
Date of creation: Mar 2011
Date of revision:
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More information through EDIRC
institutional quality; governance; economic growth; FDI; SSH countries;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
- P45 - Economic Systems - - Other Economic Systems - - - International Linkages
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