On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?
Posted: 16 Jan 2002
This paper explores whether factors that affect Foreign Direct Investment (FDI) in developing countries affect countries in Sub-Saharan Africa (SSA) differently. The results indicate that: (i) A higher return on investment and better infrastructure have a positive impact on FDI to non-SSA countries, but have no significant impact on FDI to SSA; (ii) Openness to trade promotes FDI to SSA and non-SSA countries, however, the marginal benefit from increased openness is less for SSA. These results imply that Africa is different - suggesting that policies that have been successful in other regions may not be equally successful in Africa.
Keywords: Africa, capital flows, foreign direct investment, investment risk, developing countries
JEL Classification: F1, F2
Suggested Citation: Suggested Citation