Drivers for boosting intra-African investment ows towards Africa's transformation

Abstract

The present study contains a review and analysis of the drivers for boosting intra-African investment towards Africa’s transformation and reconciles both the regional and continental perspectives. The study is intended to provide empirical evidence at the continental level on the impact of FDI on economic transformation and possible implications for regional integration. The study considers FDI inflows between 49 African countries, on the basis of available investment data provided by UNCTAD during the period 2002-2014. Given the recent trends of FDI within Africa and considering the availability of bilateral investment data, the study develops a theoretical framework and empirical models, with a view to capturing the specific regional disparities and differences in its analysis. The results presented in the empirical part of this study indicate that trade openness, infrastructure and the performance of the logistics and business environment influence the attraction of investment within Africa. The positive impact of trade openness is consistent with prior ECA research showing that the benefits brought by enhanced intra-African trade through the African Continental Free Trade Area can offer better opportunities for industrialization.