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Does Institutional Quality Matter Foreign Direct Investment? Evidence from African Countries

Author

Listed:
  • Najeh Bouchoucha

    (University of Sousse)

  • Saloua Benammou

    (University of Sousse)

Abstract

This study examines the effect of governance on the attractiveness of FDI through a sample of 41 African countries. We contribute to the literature by using various measures of institutional quality to identify the institutional quality aspects that affect the attractiveness of FDI in African countries. We use both the static panel data approach (fixed effect (FE) and random effect (RE)) and the dynamic panel approach (GMM in system). The empirical results show that the attractiveness of FDI to African countries is positively correlated with the control of corruption, the effectiveness of governments, the quality of regulation, and the voice and accountability. The results of this study imply that the dynamics of the modern economy requires African countries to improve the dimensions of governance and establish good governance practices.

Suggested Citation

  • Najeh Bouchoucha & Saloua Benammou, 2020. "Does Institutional Quality Matter Foreign Direct Investment? Evidence from African Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(1), pages 390-404, March.
    • Handle: RePEc:spr:jknowl:v:11:y:2020:i:1:d:10.1007_s13132-018-0552-y
    DOI: 10.1007/s13132-018-0552-y
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    3. Bashir Muhammad & Muhammad Kamran Khan, 2023. "Do Institutional Quality and Natural Resources Affect the Outward Foreign Direct Investment of G7 Countries?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 116-137, March.
    4. Manuel Fernandez & Robinson Joseph & Vania Maria Fernandez, 2023. "An Empirical Study Identifying the Most Favored Foreign Direct Investment Inflows Destination in the Gulf Cooperation Council Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 13(2), pages 51-60, March.
    5. Idris Abiodun Adenuga, 2023. "An Empirical Analysis Of Institutional Quality And Foreign Direct Investment Inflows In Nigeria," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 8(1), pages 8-18, March.

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