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Overseas Private Investment Corporation and Its Effect on U.S. Direct Investments in Africa

  • Joseph Y. Abekah

    (University of New Brunswick)

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    The Overseas Private Investment Corporation (OPIC) was created in 1969 to provide political rich insurance to promote U.S. direct (private) investments in less developed countries. This study examines the effect of the program on the overall levels of U.S. direct investments in Africa. Results show that no significant change in the levels of U.S. direct investments in Africa attributable to the availability of OPIC political rich insurance is evident from the model used. However, the rate at which relative U.S. direct investments in Africa was declining has slowed since the OPIC program. When measured against the strengths of respective domestic economies, U.S. direct investments in Africa are found to be actually higher than previously thought. Finally, it is found that both the GDP growth rate and the availability of OPIC political rich insurance are relatively related to the level of U.S. direct investments in Africa. The latter findings, while contrary to expectations, make rational economic sense.

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    Article provided by African Finance and Economic Association in its journal Journal of African Development.

    Volume (Year): 3 (1998)
    Issue (Month): 1 ()
    Pages: 43-64

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    Handle: RePEc:afe:journl:v:3:y:1998:i:1:p:43-64
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