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Ease of doing business and investment among West African countries

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  • Victor Ushahemba Ijirshar
  • Joshua Kpelai Nomkuha
  • Benjamin Bem Bura
  • Joseph Tarza Sokpo
  • Mlumun Queen Ijirshar

Abstract

This study assessed the link between ease of doing business (EBD) and investment among 11 selected countries in West Africa covering 2006–2020. The study used the fixed‐effects estimator, the random‐effects estimator, the augmented mean‐group method, and the Half‐Panel Jackknife Wald‐type test. The study found a bidirectional relationship between the EBD and foreign direct investment (FDI) and a unidirectional relationship running from EBD to domestic investment. The findings further revealed that the EBD and national income have a strong influence in determining the level of domestic investment and FDI inflows, and that some indicators of EBD, such as the procedure for starting a business, access to credit facilities, tax, and security threats, discourage domestic investment and FDI inflows, in contrast to the influence of obtaining electricity and national income on investment. The study suggests that West African governments reduce taxes, ease the procedures and costs of starting a business and dealing with construction permits, and increase the availability of credit facilities at lower interest rates to promote investment in the region.

Suggested Citation

  • Victor Ushahemba Ijirshar & Joshua Kpelai Nomkuha & Benjamin Bem Bura & Joseph Tarza Sokpo & Mlumun Queen Ijirshar, 2023. "Ease of doing business and investment among West African countries," African Development Review, African Development Bank, vol. 35(2), pages 97-112, June.
    • Handle: RePEc:bla:afrdev:v:35:y:2023:i:2:p:97-112
    DOI: 10.1111/1467-8268.12696
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    Cited by:

    1. Badassa W. Chala, 2024. "Effects of economic freedom and ease of doing business on trade in global value chains: Evidence from sub‐Saharan Africa," African Development Review, African Development Bank, vol. 36(1), pages 70-83, March.

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