| Abstract: | Accesses in Determining Foreign Direct Investment: Panel Data Analysis of Sub-Saharan
Africa Countries
FelekeTadesse
More recently, due to the globalization process and the increasing roles of Multinational
Corporation in economic development, many empirical literatures have been trying to take into
account the effects of not only the classical factors: but also the various institutional issues which
affect considerably the FDI flow in the host countries . So, the objective of this paper is to explore
the major accesses to FDI flow to the Sub Saharan Africa countries by focusing on main
institutional factors and other conventional variables in FD I 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 utilizing the data
of 32 SSA countries covering the period 1994-2010. Our findings reveal that among the
institutional 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
corruption, 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
FDI 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 |
