Determinants of foreign direct investment in Sub-Saharan African countries
challenges and prospects using panel data
The main objective of this thesis is to examine factors that determine FDI inflows to go or not to go in to Sub-Saharan Africa countries. Forty four Sub-Saharan African countries were sampled over the period of 1990 up to 2013. A balanced panel data analysis employed and estimated via pool ordinary least square (OLS), random effects (RE) and Fixed effect (FE). Among the three model based on husman test and an F-test fixed effect (FE) was found the appropriate model. To determine factors that affect FDI inflow, I used Trade openness, Natural Resource, Inflation, FDI lag, Return on investment, Corruption, Urban Population, Infrastructure, and Contract Enforcement as explanatory variables. The finding show that ;Trade openness, Natural Resources, FDI_1, Return on Investment (ROI), Urban Population, and Corruption are the most important determinants of FDI inflow at less than 5% level of significance . Whereas Infrastructure and Contract Enforcement, not statistically significance in determine FDI, but their sign of coefficient is as anticipated.
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