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Does Institutional Quality Matter Foreign Direct Investment? Evidence from African Countries

Author

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  • Najeh Bouchoucha

    (University of Sousse)

  • Saloua Benammou

    (University of Sousse)

Abstract

This study examines the effect of governance on the attractiveness of FDI through a sample of 41 African countries. We contribute to the literature by using various measures of institutional quality to identify the institutional quality aspects that affect the attractiveness of FDI in African countries. We use both the static panel data approach (fixed effect (FE) and random effect (RE)) and the dynamic panel approach (GMM in system). The empirical results show that the attractiveness of FDI to African countries is positively correlated with the control of corruption, the effectiveness of governments, the quality of regulation, and the voice and accountability. The results of this study imply that the dynamics of the modern economy requires African countries to improve the dimensions of governance and establish good governance practices.

Suggested Citation

  • Najeh Bouchoucha & Saloua Benammou, 2020. "Does Institutional Quality Matter Foreign Direct Investment? Evidence from African Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(1), pages 390-404, March.
    • Handle: RePEc:spr:jknowl:v:11:y:2020:i:1:d:10.1007_s13132-018-0552-y
    DOI: 10.1007/s13132-018-0552-y
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    References listed on IDEAS

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    5. Alberto Costantiello & Angelo Leogrande, 2023. "The Impact of Voice and Accountability in the ESG Framework in a Global Perspective," Working Papers hal-04043775, HAL.
    6. Michael Kofi Hanson (M.Phil), 2024. "Effect of Foreign Direct Investment on Economic Growth: The Role of Natural Resources and Trade Openness in Ghana," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3), pages 1347-1361, March.
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    11. Ishfaq Hamid & Md Shabbir Alam & Imran Ali Baig & Pabitra Kumar Jena, 2024. "Nexus Between Institutional Quality and Foreign Direct Investment Inflows: Panel Data Analysis of SAARC Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 7993-8019, June.
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