Accesses in Determining Foreign Direct Investment: Panel Data Analysis of Sub-Saharan Africa Countries
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Date
2012-06
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A.A.U
Abstract
More recently, due to the globalization process and the increasing roles of
Multinational Corporation in economic development, many empirical literatures have
been tryi ng to take into account the effects of not only the classical factors: but also
the various institutional issues which affect considerably the For flow in the host
countries. So, the objective of this paper is to explore the major accesses to FDl flow
to the Sub Saharan Africa countries by focu sing on main institutional factors, and
other conventional variables in For flow to the region. For this purpose, we employed
two panel model techniques: the fixed effect and dynamic panel model (the system
GMM estimator of Arellano and Bover (1995) and Blundell and Bond (1998)) by
utili zing the data of 32 SSA countries covering the period 1994-20 I O. Our findings
reveal that among the in stitutional quality variables ( regulatory quality), past level of
inward FDI, market size, openness, natural resource availability, financial
development if supported by regulatory quality are found to be important derivers of
FDI flow to the region. Conversely measures in control of corrupt ion, the existing rule
of law, macroeconomic condition (i.e. inflation and exchange rate) and infrastructural
situation are found to be insignificant for the region's FDI flow. To increase For flow
to the region policy makers (economic administers) of the region need to strive to
improve and amend their policy regarding their institutions: rule of law, the way to
control corruption, develop infrastructures, improve macroeconomic condition and
should diversify and develop their economies.
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Keywords
Investment: Panel, Accesses In Determining