The Motives for Inward FDI into Sub-Saharan Africa Countries

Godwin Okafor, Jenifer Piesse, Allan Webster

    Research output: Contribution to journalArticle

    Abstract

    This study contributes to the FDI literature by investigating the impact of all four locational motives of FDI in Sub-Saharan African (SSA) countries for the period 1996–2010. To achieve this aim, panel data techniques (pooled OLS, fixed effects and GMM) were employed on a sample of SSA countries. The empirical results showed that efficiency and strategic asset seeking factors influenced FDI activities in SSA for the period investigated. Market size also influenced FDI however this was less robust to specifications. Surprisingly, FDI in SSA was not resource seeking. Furthermore, a statistical test confirmed structural and behavioural differences in FDI determinants between SSA sub-regional groups and when analysed separately, FDI in West and Central SSA was market and efficiency seeking while FDI in South and East Africa was best explained by efficiency seeking factors. Based on the empirical findings, a number of policy implications were derived. These policy implications include further implementation of policies targeted at increasing and sustaining trade liberalisation and trade diversification, control of corruption, credible upgrades and productive investments in infrastructure, and support for human capital accumulation as FDI is increasingly directed towards R&D, innovation and strategic asset activities.
    Original languageEnglish
    Pages (from-to)875-890
    JournalJournal of Policy Modelling
    Volume37
    Issue number5
    DOIs
    Publication statusPublished - 2015

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