Do Sub-Saharan African leaders need to promote infrastructure development to attract Foreign Direct Investment?

This study analyzes the role of infrastructure on foreign direct investment (FDI) inflows to Sub-Saharan Africa. It uses panel data for the period 1980-2016 to assess if changes in the availability of infrastructure influence... [ view full abstract ]

This study analyzes the role of infrastructure on foreign direct investment (FDI) inflows to Sub-Saharan Africa. It uses panel data for the period 1980-2016 to assess if changes in the availability of infrastructure influence FDI inflows. An understanding of this relationship will assist African policymakers to create and implement infrastructure policies for drawing in FDI. Several measures of infrastructure are used to account for the varied types of physical infrastructure. The estimation results from the cross-country regressions indicate that there is a positive relationship between communication infrastructure and FDI inflows. However, there is no evidence of the importance of transportation and electrical infrastructure on FDI which indicates that sub-Saharan Africa mainly attracts resource-seeking FDI. Other independent variables, openness to trade, agglomeration effects and natural resources endowment all have a positive impact on FDI .