Determinants of foreign direct investment in sub-Saharan Africa, with inferences on Kenya
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Date
2001Author
Wanjala, Mukhwana Bernadette
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Foreign Direct Investment (FDI) is an important source of capital jar African countries
where massive capital amounts are needed to finance development. FDI inflows into
Africa have remained stable throughout the I990s, despite the increase in global volume.
The African share of global FDJ inflows remained at the low level of2.3% ill 1997,1.2 %
in 1998 and also 1.2% ill 1999. This paper analyses the determinants of FDJ ill Sub-
Saharan Africa, in an attempt to explain the low levels of FDI in the region despite the
increase in global volume. Using a sample of 20 Sub-Saharan African countries over the
;
. period 1990 to 1999, the empirical results show that real GDP growth rate, taxation
policy and the degree of openness of an economy significantly determine FDI in these
countries. While real GDP growth rate encourages FDJ, taxation policy and degree of
openness of an economy were found to deter FDJ. Further inference on Kenya show that
the model actually explains the declining net FDI inflows into the country, mainly due to
the taxation and liberalisation policies pursued by the government. Therefore, sound
taxation policies, steady economic growth and control of feedback effects of opening up
an economy would increase FDI inflows into Sub-Saharan Africa.
Citation
Master of Arts in Economics.Sponsorhip
University of NairobiPublisher
Department of Economics, University of Nairobi.Jn