Foreign Direct Investment Drivers, Is Sub-Saharan Africa, a different case? Using the Cointegration Approach

Abstract

The growth of the economy is fundamental to economic and social well-being. Factors that can be attributed to economic growth include foreign direct investment. Using the Cointegration approach, data from 1991 to 2015 from three major economies in sub-Saharan Africa that represent East Africa, SADc and Eco was regional groupings is used to analyze the major determinants of foreign direct investment. The study only included countries with complete data. The results indicate that countries with well-developed infrastructure are likely to attract foreign investors. Likewise, a higher return on investment is significant in influencing foreign direct investment. Confirming previous studies in developed economics, the results indicate that openness to trade is significant in attracting foreign capital. The research demonstrates the urgent need to improve infrastructure, streamline red tape and reduce the cost of operations, including taxation.