The determinants of inward foreign direct investment : evidence from Sub-Saharan Africa

Abstract

This study attempts to establish the determinants of Foreign Direct Investment into Sub-Saharan African countries for the periods before and after the 2008 global financial crisis. The World Bank secondary data source was used to obtain data for this study. The relationship between inward FDI, trade openness, institutional quality and infrastructure investment were analysed using multiple linear regression analyses. The time horizon for this research was a ÒsnapshotÓ time horizon which is referred to as cross sectional, a ÒsnapshotÓ was taken of the periods 2002 to 2008 and 2009 to 2016. The key results of this study were that trade openness was a determinant of FDI for the periods 2002 until 2008 and 2009 until 2016, institutional quality was a determinant of FDI for the period 2009 until 2016, low infrastructure investment was a determinant of FDI for both time periods and there were no statistically significant results between inward FDI and control of corruption. The results obtained from this study, namely trade openness, institutional quality and low infrastructure investment, as determinants of FDI, indicate a need for the revision of policy in the SSA region in order to increase the inflow of FDI into the countries in this region.