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Investment Motives in Africa: What Does the Meta-Analytic Review Tell?

Author

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  • Amar Anwar
  • Ichiro Iwasaki
  • Utz Dornberger

Abstract

Over the past two decades, Africa has witnessed a dramatic increase in foreign direct investment (FDI) despite a lack of significant changes in infrastructure and the host country’s policies. What are the motives to invest in Africa? How do these investment motives differ for firms from developed and emerging markets? Several studies empirically tested these questions, however, provided inconclusive results. By taking 735 estimates extracted from 51 studies and applying advanced meta-analysis techniques, this study examines the motives of FDI in Africa. We found that compared to market-seeking motive, the effect size of resource seeking and efficiency seeking is larger (smaller) on FDI attractiveness in Africa. In terms of effect size, the impact of asset-seeking motive on FDI is statistically comparable to that of market-seeking motive. Contrary to general perceptions, the impact of natural resources on FDI attractiveness in Africa is not different from market seeking for developed countries’ firms. Our results show that compared to GDP per capita, the effect size of accessing minerals and oil reserves on FDI attractiveness in Africa is positive and significant for global and emerging market firms. Our research shows that there is more likelihood of type I and type II publication selection bias in this research field.

Suggested Citation

  • Amar Anwar & Ichiro Iwasaki & Utz Dornberger, 2022. "Investment Motives in Africa: What Does the Meta-Analytic Review Tell?," Journal of African Economies, Centre for the Study of African Economies, vol. 31(1), pages 1-52.
    • Handle: RePEc:oup:jafrec:v:31:y:2022:i:1:p:1-52.
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    File URL: http://hdl.handle.net/10.1093/jae/ejab011
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    Cited by:

    1. Pooja Thakur-Wernz & Helena Barnard & Marianne Matthee, 2024. "Knightian uncertain violence and the challenge of FDI-assisted development: policy recommendations where civilian lives are at risk," Journal of International Business Policy, Palgrave Macmillan, vol. 7(3), pages 356-390, September.

    More about this item

    Keywords

    motives of FDI; locational determinants of FDI; Africa; SSA; meta-analysis; publication selection bias; JEL Classification: F21; F23; G11; N17; N27;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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