n South African Journal of Economic and Management Sciences - Trade openness and Foreign Direct Investment in Africa : economics
|Article Title||Trade openness and Foreign Direct Investment in Africa : economics|
|© Publisher:||University of Pretoria|
|Journal||South African Journal of Economic and Management Sciences|
|Author||Tonia Kandiero and Margaret Chitiga|
|Publication Date||Sep 2006|
|Pages||355 - 370|
|Keyword(s)||F11 and F41|
ISI Social Science
Africa's share of foreign direct investment (FDI) has lagged behind other regions in the world, despite a sharp increase in FDI inflows to the region in 2001. Factors contributing to this circumstance include perceptions of high corruption, weak governance and poor infrastructure. The motivation of this paper is to investigate the impact of openness to trade on the FDI inflow to Africa. In addition to economy-wide trade openness, we also analyse the impact on FDI of openness in manufactured goods, primary commodities and services. The empirical work uses cross-country data from selected African countries observed over four periods: 1980-1985, 1985-1990, 1990- 1995 and 1995-2001. We find that the FDI to GDP ratio responds well to increased openness in the whole economy and in the services sector in particular.
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