Natural Resources, Quality of Institutions and Foreign Direct Investment in sub-Saharan Africa
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Date
2020-11-15
Authors
Ludovic, Feulefack Kemmanang
Bertelet, Ngassam Sylvain
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
An analysis of statistics on foreign direct investment (FDI) inflows reveals that
some countries in sub-Saharan Africa (SSA), which are heavily endowed with
natural resources and have internal conflicts, have managed to attract significant
FDI. This study sought to determine whether it is possible that, for the same
countries with weak institutions, some foreign investors can be attracted to
invest in them while others are systematically repelled. We found that weak institutions are favourable to FDI inflows into the extractive sector, while they crowd
out FDI into other sectors. Thus, resource-rich countries do not need institutional
reforms to attract FDI.