Institutional Quality, Investors Objectives and FDI Inflow in African Regions

  • Emmanuel Oladapo George Olabisi Onabanjo University, Ago Iwoye, Ogun State.
  • Felix Aberu Tai Solari University of Education. Ijagun Ijebu-Ode
  • Soliu Bidemi Adegboyega Olabisi Onabanjo University, Ago Iwoye, Ogun State.
Keywords: Foreign direct investment; Market seeking; Efficiency seeking; Institutional Quality

Abstract

This paper investigates the impact of institutional quality and investors’ objectives on Foreign Direct Investment (FDI) inflows using the system Generalized Method of Moments (GMM) for the sample period of 1996–2019. The empirical findings confirmed that institutional quality does not determine FDI inflows in the selected countries across the five (5) African regions while, investors’ objectives were found to influence FDI inflows across the selected countries. The magnitude of the coefficients of political stability, control of corruption and rule of law are less significant. This study therefore concluded that institutional quality was not pungent to endogenously work with other macroeconomic variables to attract FDI inflows in the five (5) African regions during the period of investigation. However, market seeking objectives crowd-out FDI inflows negatively while efficiency seeking objective have positive impact on FDI inflows in the five African regions. Hence, the analysis inferred that investors’ objectives are the core determinants of FDI inflows in the five African regions.

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Published
2021-05-10
Section
Economic Development, Technological Change, and Growth