Does macro-level corporate governance attract foreign direct investment (FDI)? a review of Sub-Saharan African Countries

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Stellenbosch : Stellenbosch University
ENGLISH ABSTRACT: The performance of the Sub-Saharan Africa (SSA) region in attracting foreign direct investment (FDI) relevant to other developing regions has been poor over the last two decades, especially compared to Asian developing countries. FDI inflows are a catalyst for economic growth, employment and poverty reduction. This study examined whether good macro-level corporate governance, which is the way countries are managed and governed, can assist in promoting countries as potential investment locations. The Worldwide Governance Index, which has been developed by Kaufmann et al (1999, 2008, 2011), was used to objectively measure the performance of the SSA region. The region has generally been perceived to be negatively impacted by political risk, lack of government leadership, weak institutions, ineffective implementation of policies and a region susceptible to corruption. This study examined the relationship between macro-level governance performances of the SSA region and sought to determine whether this is a contributing factor which affects FDI inflows. The study used panel data fixed effect estimator for a sample of 45 SSA countries from 2002 to 2011. The findings have revealed that macro-level corporate governance has a positive impact and is statistically significant in attracting FDI inflows. In addition to the other factors which drive FDI inflows for the region, this provides an incentive to host countries to develop polices which can leverage and promote investment to the region, fundamentally addressing pressing social challenges and sustainable economic development and growth.
AFRIKAANSE OPSOMMING: Geen opsomming beskikbaar
Thesis (MA)--Stellenbosch University, 2015.
Foreign direct investment, corporate governance