Exploring Determinants and Effects of Foreign Direct Investment: The Case of Sub-Saharan Africa
Date of Award
Open Access Thesis
Master of Science (MS)
Foreign Direct Investment (FDI) is among the most dynamic international resource flows to developing countries. FDI's is usually a mix of investments in both tangible and intangible assets and firms that deploy such assets are often important players in the global economy. Many argue that FDI can be expected to facilitate the transfer of new technology, help improve workers' skills and welfare in recipient countries. Others argue that FDI is focused primarily on resource extraction and may have little broad contribution to recipient economy. But what are the determinants of FDI? What is the role of resource prices, macroeconomic and country-specific factors? What is the contribution of FDI to welfare of populations in recipient countries? This paper attempts to answer these questions for the economies of sub-Saharan Africa (SSA) for the last quarter century. Using panel data methods, this meta-analysis research finds that historical levels of development, economic growth, monetary policy and resource prices appear to offer some explanatory power for FDI flows over time. Additionally, comparative cross-country analysis suggests that country-specific circumstances and policies may be as important as or even more important for determinants of FDI than common factors affecting all SSA economies. Lastly, the paper finds that FDI has no impact on household consumption per capita growth in SSA, indicating little broad direct benefit of FDI for private consumption of SSA populations.
Kiiru, Joan O. W., "Exploring Determinants and Effects of Foreign Direct Investment: The Case of Sub-Saharan Africa" (2014). Graduate Masters Theses. 273.