Transport infrastructure and FDI: lessons from Sub-Saharan African

Abstract

This paper analyses the role of infrastructure availability, particularly with respect to transportation in determining the attractiveness of foreign direct investment (FDI) inflows. The study is based a panel of 33 Sub-Saharan African countries for the period 1984-2002. Using both static and dynamic panel data approach, transport infrastructure availability is seen to have been contributing to the relative attractiveness of the countries in our sample. Foreign direct investors are also sensible to the other measure of infrastructure, though to a lesser extent as compared to transportation. FDI flows to African economies are confirmed to be resource seeking and also market seeking/openness seeking rather as well. Moreover the study also establishes the presence of dynamism and endogeneity in FDI modeling.