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What Drives Foreign Direct Investment in Africa? An Empirical Investigation with Panel Data
Author(s) -
Mijiyawa Abdoul’ Ganiou
Publication year - 2015
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/1467-8268.12155
Subject(s) - foreign direct investment , panel data , international economics , economics , developing country , investment (military) , business , international trade , macroeconomics , economic growth , econometrics , political science , politics , law
This paper analyzes factors that drive foreign direct investment (FDI) in Africa. To do so, for the first time in the literature, the paper uses 5‐year panel data and the system‐GMM technique over the period 1970–2009. The main results are as follows: (a) larger countries attract more FDI; (b) regardless of their size, however, more open countries, politically stable countries, and countries offering higher return to investment also attract FDI; (c) FDI inflows are persistent in Africa. This suggests that countries that manage to attract FDI today are likely to attract more FDI in the future.