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Foreign direct investment determinants in Sub-Sahara Africa: A co-integration analysis

Author

Listed:
  • Anthony Bende-Nabende

    (The Business School, The University of Birmingham)

Abstract

This study provides an empirical assessment of the factors that significantly influence the long-run transnational corporations' investment decision making process in Sub-Sahara Africa. The empirical evidence based on a co-integration analysis of 19 countries suggests that the most dominant long-run determinants of FDI in Sub-Sahara Africa are market growth, export-orientation policy and FDI liberalisation. These are followed by real exchange rates and market size. Bottom on the list is openness. However, the results for real wage rates and human capital are inconclusive.

Suggested Citation

  • Anthony Bende-Nabende, 2002. "Foreign direct investment determinants in Sub-Sahara Africa: A co-integration analysis," Economics Bulletin, AccessEcon, vol. 6(4), pages 1-19.
    • Handle: RePEc:ebl:ecbull:eb-02f20002
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    References listed on IDEAS

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    Cited by:

    1. Abdikarim Bashir Jama & Sabri Nayan, 2022. "The Nexus between Institutional Quality & Foreign Direct Investment (FDI) in Sub-Saharan Africa," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(8), pages 1-11, August.
    2. Tiblets Nguse & Betgilu Oshora & Maria Fekete-Farkas & Anita Tangl & Goshu Desalegn, 2021. "Does the Exchange Rate and Its Volatility Matter for International Trade in Ethiopia?," JRFM, MDPI, vol. 14(12), pages 1-18, December.
    3. Toure Mamoudou & Cédric Achille Mbeng Mezui, 2017. "Working Paper 271 - Facteurs déterminants des IDE en Afrique," Working Paper Series 2388, African Development Bank.
    4. Andrés Rodríguez-Pose & Gilles Cols, 2017. "The determinants of foreign direct investment in sub-Saharan Africa: What role for governance?," Regional Science Policy & Practice, Wiley Blackwell, vol. 9(2), pages 63-81, June.
    5. Jean-Francois HOARAU, 2009. "INVESTISSEMENTS DIRECTS eTRANGERS ET INTeGRATION ReGIONALE : UN eTAT DES LIEUX POUR LE MARCHe COMMUN D’AFRIQUE DE L’EST ET DU SUD," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 29, pages 69-103.
    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. Mebratu Seyoum & Renshui Wu & Jihong Lin, 2014. "Foreign Direct Investment and Trade Openness in Sub-Saharan Economies: A Panel Data Granger Causality Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 82(3), pages 402-421, September.
    8. Dondashe, Nandipha & Phiri, Andrew, 2018. "Determinants of FDI in South Africa: Do macroeconomic variables matter?," MPRA Paper 83636, University Library of Munich, Germany.
    9. Akinlo Taiwo & Simon-Oke O. Olayemi, 2015. "Re-examine foreign direct investment and economic growth: Panel co-integration and causality tests for sub-Saharan African countries," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 18(1), pages 73-86, March.
    10. 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.
    11. Mhlanga, Nomathemba & Blalock, Garrick & Christy, Ralph D., 2009. "Understanding Foreign Direct Investment in the Southern African Development Community: An Analysis Based on Project-Level Data," 2009 Conference, August 16-22, 2009, Beijing, China 51632, International Association of Agricultural Economists.
    12. Cleeve, Emmanuel A. & Debrah, Yaw & Yiheyis, Zelealem, 2015. "Human Capital and FDI Inflow: An Assessment of the African Case," World Development, Elsevier, vol. 74(C), pages 1-14.
    13. Yapatake Kossele Thales Pacific & Ngaba Mbai-Akem Gabriella Magalie, 2023. "One Bad Turn Deserves Another: How Energy Production, Financial Instability, and Political Governance Crisis Sustain the Decline of FDI Inflows in the Central African Republic," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 831-853, June.
    14. Elizabeth Asiedu, 2006. "Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability," The World Economy, Wiley Blackwell, vol. 29(1), pages 63-77, January.
    15. Nomathemba Mhlanga & Garrick Blalock & Ralph Christy, 2010. "Understanding foreign direct investment in the southern African development community: an analysis based on project‐level data," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3‐4), pages 337-347, May.
    16. Sabariah Nordin & Gairuzazmi B. Mat Ghani, 2015. "Trade Liberalization and Foreign Direct Investment in Malaysia," Information Management and Business Review, AMH International, vol. 7(6), pages 11-23.

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    More about this item

    Keywords

    Determinants;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F0 - International Economics - - General

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