scholarly journals The Determinants of FDI in Sub-Saharan Economies: A Study of Data from 1990–2017

2019 ◽  
Vol 7 (3) ◽  
pp. 43 ◽  
Author(s):  
Prince Jaiblai ◽  
Vijay Shenai
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Developing Economies ◽  
National Income ◽  
Extensive Literature ◽  
Cross Sectional ◽  
Income Levels ◽  
Sub Saharan ◽  
Determinants Of Fdi

Foreign Direct Investment (FDI) can bring in much needed capital, particularly to developing countries, help improve manufacturing and trade sectors, bring in more efficient technologies, increase local production and exports, create jobs and develop local skills, and bring about improvements in infrastructure and overall be a contributor to sustainable economic growth. With all these desirable features, it becomes relevant to ascertain the factors which attract FDI to an economy or a group of adjacent economies. This paper explores the determinants of FDI in ten sub-Saharan economies: Liberia, Sierra Leone, Ivory Coast, Ghana, Nigeria, Mali, Mauritania, Niger, Cameroun, and Senegal. After an extensive literature review of theories and empirical research, using a set of cross-sectional data over the period 1990–2017, two econometric models are estimated with FDI/GDP (the ratio of Foreign Direct Investment to Gross Domestic Product) as the dependent variable, and with inflation, exchange rate changes, openness, economy size (GDP), income levels (GNI/capita (Gross National Income) per capita), and infrastructure as the independent variables. Over the period, higher inflows of FDI in relation to GDP appear to be have been attracted to the markets with better infrastructure, smaller markets, and lower income levels, with higher openness and depreciation in the exchange rate, though the coefficients of the last two variables are not significant. These results show the type of FDI attracted to investments in this region and are evaluated from theoretical and practical viewpoints. FDI is an important source of finance for developing economies. On average, between 2013 and 2017, FDI accounted for 39 percent of external finance for developing economies. Policy guidelines are formulated for the enhancement of FDI inflows and further economic development in this region. Such a study of this region has not been made in the recent past.

scholarly journals THE DETERMINANTS OF FDI IN SIX FORMER FSU COUNTRIES: A STUDY OF DATA 1995–2017

2020 ◽  
pp. 140-181
Author(s):  
Vijay SHENAI ◽  
Artem SHCHERBYNA ◽  
Sergei VORONIN ◽  
Dmitriy OLKHOVSKYY
Keyword(s):  
Exchange Rate ◽  
Soviet Union ◽  
Former Soviet Union ◽  
Explanatory Power ◽  
Extensive Literature ◽  
Cross Sectional ◽  
Income Levels ◽  
Long Run ◽  
Fixed Line ◽  
Determinants Of Fdi

Foreign Direct Investment (FDI) can bring in much needed capital, particularly in emerging markets, help improve manufacturing and trade sectors, bring in more efficient technologies, increase local production and exports, create jobs and develop local skills, bring about improvements in soft and hard infrastructure and overall be a contributor to sustainable economic growth in the Gross Domestic Product (GDP). With all these desirable features, it becomes relevant to ascertain the factors which attract FDI to an economy or a group of adjacent economies. This paper explores the determinants of FDI in six Former Soviet Union (FSU): Ukraine, Belarus, Armenia, Russia, Moldova and Kazakhstan. After an extensive literature review of theories and empirical research and using a set of cross-sectional data over the period 1995–2017, an ARDL model is estimated with FDI/GDP as the dependent variable. Inflation, exchange rate changes, openness, economy size (GDP), Income levels (GNI per capita), Infrastructure (measured by the number of fixed line and mobile subscription per 100 persons) are tested as independent variables for explanatory power in long run and short run relationships. Over the period, higher inflows of FDI in relation to GDP appear to be have been attracted to the markets with better infrastructure, smaller markets and higher income levels, with lower openness, depreciation in the exchange rate and higher income levels though the coefficients of the last three variables are not significant. The results show the type of FDI attracted to investments in this region and are evaluated from theoretical and practical view points. Policy recommendations are made to enhance FDI inflows and further economic development in this region. Such a study of this region has not been made in the past. JEL: C21, F21, F23.

scholarly journals Studying Determinants of Foreign Direct Investment in Nigeria: An Empirical Investigation

2020 ◽  
pp. 73-84
Author(s):  
Ibeinmo Friday Cookey ◽  
Francis Ariayefa Eniekezimene
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Direct Investment ◽  
Inflation Rate ◽  
Trade Openness ◽  
The Other ◽  
Annual Data ◽  
Other Hand ◽  
Determinants Of Fdi

This research paper investigated the determinants of foreign direct investment inflow into the Nigerian economy. This is because Nigeria at present is still characterized by low economic growth, which has created other macro-economic problems like inflation, low export, unemployment, unfavorable exchange rate, balance of payment disequilibrium, etc. The study adopted the Autoregressive Distributed Lag (ARDL/Bounds testing) econometric tool to examine the determinants of foreign direct investment (FDI) in the Nigerian economy. Data for the analysis are annual data covering the period 1981-2019, obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin several issues. The study used inflation rate (INFR), interest rate (INTR), exchange rate (EXR) and trade openness (TOPN) as independent variables. While foreign Direct Investment (FDI) was used as the dependent variable. The result indicates that exchange rate (EXR) and trade openness (TOPN) are all positive determinants of FDI in the Nigerian economy as their corresponding coefficients are positive. The result further shows that for the Nigerian economy to attract FDI significantly by one percent, exchange rate and trade openness will increase by 0.18 and 5.00 percent respectively. On the other hand, inflation rate (INFR), and interest rate (INTR) are negative determinants of foreign direct investment in Nigeria. Meaning that, an attempt to increase either of these variables would result to a decline in foreign direct investment in the country and vice versa. We therefore conclude that both EXR and TOPN had a positive and significant impact on the FDI inflow to the Nigerian economy, and are therefore adjudged positive determinants of FDI inflow into the Nigerian economy within the period 1981-2019. INFR and INTR on the other hand maintained their negative influence on FDI inflow to the Nigerian Economy, hence, are negative determinants of FDI inflow into the Nigerian economy within the period 1981-2019. Finally, we recommend that government should sustain its drive for import substitutions which will encourage export, expand its bilateral trade ties with developed economies so as to woo FDI inflows. Also, government through it monetary authorities should reduce inflation and interest rates. This will help to woo FDI inflow into the Nigerian economy.

scholarly journals The Evolving Framework of Determinants of Foreign Direct Investment: A Review of Literature

2018 ◽  
Vol 4 (02) ◽  
Author(s):  
Rahul Bhasin ◽  
K V Bhanu Murthy
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
New Technology ◽  
Trade Openness ◽  
Private Investment ◽  
Political Stability ◽  
Policy Makers ◽  
Managerial Skills ◽  
Determinants Of Fdi

The last two decades have witnessed intense competition among countries, particularly developing economies, to attract foreign direct investment (FDI). This is because FDI fills the gap between desired investment and domestic private investment and helps them to acquire new technology and managerial skills. This paper attempts to understand the evolution of FDI theory along with changes in the significance of determinants of FDI over a period of time. An analysis of the extant literature shows that factors such as market size and per capita incomes have remained important determinants of FDI decisions both traditionally as well as in contemporary times. However, some factors such as resources, trade openness and FDI openness have now become secondary factors influencing FDI. Other factors which were earlier secondary but have now gained prominence as FDI determinants are infrastructure; institutional factors such as corruption and political stability; and tax related variables. The above review provides us insights into the changing aspects of FDI decision-making and can provide useful inputs to policy makers regarding the areas which need focus for creating a congenial climate for FDI

scholarly journals The Impact of Trade Openness and Foreign Direct Investment on Economic Welfare in sub-Saharan Africa

2021 ◽  
Vol 12 (2) ◽  
pp. 389
Author(s):  
Folasade Bosede Adegboye ◽  
Olumide Sunday Adesina ◽  
Felicia Omowunmi Olokoyo ◽  
Stephen Aanu Ojeka ◽  
Victoria Abosede Akinjare
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Industrial Development ◽  
Developing Economies ◽  
Trade Openness ◽  
Sub Saharan Africa ◽  
Economic Welfare ◽  
Sub Saharan ◽  
Openness To Trade ◽  
The Impact

The sub-Saharan African region is characterized by a high relative degree of openness to trade. The region is also identified with increased inflows of foreign investments with no significant welfare improvement. Economic development emphasizes that the lack of domestic investment in the developing economies could be boosted by trade openness and inflow of Foreign Direct Investment (FDI) for impactful enhancement of capital formation. In this article, the impact of trade openness and foreign capital inflow on economic welfare was examined on a sub-regional analysis for sub-Saharan Africa. The study also appraised the effect of openness to trade and FDI inflow on the region's economic welfare. The data for 30 countries from 2000 to 2018 were collected and analyzed, with the Generalized Least Square (GLS) technique to fit the model developed. The study showed that openness to trade has a significant impact on economic welfare for all sub-Saharan Africa regions, while FDI is only significant for the Western sub-region. Hence, the study recommends that the government of the countries in the sub-Saharan Africa region should boost trade openness to enhance efficiency in productivity, and improve industrial development.

Sign in / Sign up

Export Citation Format

Share Document