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Foreign direct investment in Africa : policies also matter

Author

Listed:
  • Morisset, Jacques

Abstract

Africa has not succeeded in attracting much foreign direct investment in the past few decades. When countries did attract multinational companies, it was principally because of their (abundant) natural resources and the size of their domestic market. Angola, Cote d'Ivoire, Nigeria, and South Africa have traditionally been the main recipients of foreign direct investment in Sub-Saharan Africa. But the author shows that a few Sub-Saharan countries have generated interest among international investors by improving their business environment. In the 1990s, Mali, Mozambique, Namibia, and Senegal attracted substantial foreign direct investment--more so than countries with bigger domestic markets (Cameroon, Republic of Congo, and Kenya) and greater natural resources (Republic of Congo and Zimbabwe). Mali and Mozambique, which improved their business climate spectacularly in the 1990s, did so with a few strategic actions: liberalizing trade, launching an attractive privatization program, modernizing mining and investment codes, adopting international agreements on foreign direct investment, developing a few priority projects that had multiplier effects on other investment projects, and mounting an image-building effort in which political figures such as the nation's president participated. These actions are similar to those associated with the success of other small countries with limited natural resources, such as Ireland and Singapore about 20 years ago.

Suggested Citation

  • Morisset, Jacques, 2000. "Foreign direct investment in Africa : policies also matter," Policy Research Working Paper Series 2481, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2481
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    References listed on IDEAS

    as
    1. Drabek, Zdenek & Payne, Warren, 2002. "The Impact of Transparency on Foreign Direct Investment," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 17, pages 777-810.
    2. repec:zbw:wtowps:99-02 is not listed on IDEAS
    3. Singh, Harinder & Kwang W. Jun, 1995. "Some new evidence on determinants of foreign direct investment in developing countries," Policy Research Working Paper Series 1531, The World Bank.
    4. Madani, Dorsati, 1999. "A review of the role and impact of export processing zones," Policy Research Working Paper Series 2238, The World Bank.
    5. Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
    Full references (including those not matched with items on IDEAS)

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