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A Mixed-Methods Study of Factors Influencing Foreign Direct Investment in Sub-Saharan Africa

Yero, Aissa
http://orcid.org/0000-0003-4089-1402
http://rave.ohiolink.edu/etdc/view?acc_num=case1704753613322435

Abstract Details

2023, Doctor of Philosophy, Case Western Reserve University, Management.
With a new wave of policy reforms taking place in Sub-Saharan Africa to render the investment environment more favorable and lure investors, whether investors are responding to the changes and investing in the different sectors of Foreign Direct Investment (FDI) rather than predominantly in natural resources is uncertain. The investment environment is critical to investors while making decisions on FDI in SSA. While most developing countries depend heavily on FDI as a source of financing, FDI in the critical sectors providing greater value-added and enhancing productivity remain negligible in SSA. The findings from a mixed-methods study suggest that despite the endeavor of SSA to improve the investment environment, FDI in certain sectors is not responding properly to the specific changes in policy reforms concerning investment security, a conducive environment, or economic integration, although an increase in overall FDI is recorded during later periods of higher reforms (2005–2018) than during earlier periods of lower reforms (1998–2004). This dissertation consists of three studies integrated as a mixed-methods study. In Study 1, we conducted a qualitative analysis of 25 MNEs and governmental and non-governmental agencies to investigate how foreign investors are navigating SSA as a host for FDI, considering the current changes in the investment environment of SSA. This assessment provides an understanding of the shift in the inflow of FDI. The findings suggest that the tendencies of potential investors in Sub-Saharan African countries are drawn to make investment decisions based on various factors such as investment security, a conducive environment, and the role of economic integration in strengthening the investment environment in SSA. In Study 2, we set out to investigate the role of economic integration and its effects on investment security and a conducive environment in attracting the inflow of FDI. The analysis consisted of examining secondary data on total FDI inflows into 47 SSA countries from 1998 to 2020, utilizing a quantitative approach. We utilized a Feasible Generalized Least Square (FGLS) analysis to circumvent various issues encountered in fixed-effects models. The findings suggest that investment security and economic integration are insufficient to impact FDI. However, a conducive environment does have a positive impact on the inflow of FDI. Given that total FDI in SSA is dominated by investment in natural resource extraction, Study 3 explores whether the same factors influence FDI in other sectors. This study utilized a quantitative method and conducted FGLS and fixed-effects analyses to abide by the various diagnostics. The secondary data on FDI by sector are available for only 10 SSA countries. The findings suggest that the high reforms are making a difference in the inflow of FDI by sectors; however, these reforms may not be sector-targeted as the crucial sectors, such as manufacturing and services, do not seem to be responding properly to the individual reforms. Economic integration and investment security benefit natural resources the most, while a conducive environment and reforms, in general, benefit the services sector the most over other sectors of FDI. FDI in natural resources alone seems to be driven by other factors outside our model. The manufacturing sector is not properly responding either to individual or overall reforms.
Bo Carlsson (Committee Member)
Kalle Lyytinen (Committee Chair)
Philip Cola (Committee Member)
Yunmei Wang (Committee Member)
229 p.
Economics; Management; Public Policy
foreign direct investment; sectoral FDI; economic integration; investment security; a conducive environment; economic growth; trade unions; economic development

Recommended Citations

Citations

  • Yero, A. (2023). A Mixed-Methods Study of Factors Influencing Foreign Direct Investment in Sub-Saharan Africa [Doctoral dissertation, Case Western Reserve University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=case1704753613322435

    APA Style (7th edition)

  • Yero, Aissa. A Mixed-Methods Study of Factors Influencing Foreign Direct Investment in Sub-Saharan Africa. 2023. Case Western Reserve University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=case1704753613322435.

    MLA Style (8th edition)

  • Yero, Aissa. "A Mixed-Methods Study of Factors Influencing Foreign Direct Investment in Sub-Saharan Africa." Doctoral dissertation, Case Western Reserve University, 2023. http://rave.ohiolink.edu/etdc/view?acc_num=case1704753613322435

    Chicago Manual of Style (17th edition)

case1704753613322435
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© 2023, all rights reserved.
This open access ETD is published by Case Western Reserve University School of Graduate Studies and OhioLINK.
Release 3.2.12