Analysis of corruption and foreign direct investment in Africa
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2014
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eng
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169 leaves.
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ba187651
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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
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Abotsi, Anselm Komla (2014). Analysis of corruption and foreign direct investment in Africa. Retrieved from: http://repository.nida.ac.th/handle/662723737/3429.
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Analysis of corruption and foreign direct investment in Africa
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Abstract
This research seeks to formulate a theory relating FDI and corruption and
empirically assess the aptness of this theory. This research seeks not only to establish
that in general corruption has a negative impact on FDI inflow to Africa but also to
show that there is a threshold referred to as the Corruption Tolerable Level of
Investment (CTLI), below which corruption is expected to have a positive impact on
FDI inflow to Africa. This research also seeks to deploy data on actual corruption to
establish that corruption has a negative impact on foreign ownership of firms in
Africa. Secondary data from the World Development Indicators (WDI DATABANK)
2012 was used to assess the impact of corruption on FDI in Africa. The source of data
for analyzing the effects of corruption on foreign ownership of firms in Africa is the
World Business Environment Survey (WBES) conducted by the World Bank. In order
to meet the objectives of the study, the dynamic panel data estimation technique as
well as the Tobit and probit estimation techniques were deployed. The estimated
Corruption Tolerable Level of Investment (CTLI) in Africa is -0.27 on the control of
corruption scale which ranges from approximately -2.5 (weak) to 2.5 (strong). The
findings also indicate that the percentage of total annual sales of the firm paid as
informal payments to the public officials has a negative and highly significant impact
on foreign ownership of firms in Africa. Therefore African governments should
institute policies to control corruption in the public sector in order to enhance the
country’s performance on the control of corruption index. This will boost foreign
investors’ confidence in their economies.
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Dissertation (Ph.D. (Economic))--National Institute of Development Administration, 2014.