TY - JOUR
T1 - Ease of Doing Business and Foreign Direct Investment
T2 - Case of Sub-Saharan Africa
AU - Nketiah-Amponsah, Edward
AU - Sarpong, Bernard
N1 - Publisher Copyright:
© 2020, International Atlantic Economic Society.
PY - 2020/8/1
Y1 - 2020/8/1
N2 - This paper investigates the empirical relationship between selected ease-of-doing-business indicators and foreign direct investment in sub-Saharan Africa. Using a panel of 45 sub-Saharan African countries covering the period 2004–2018 and the system generalized method of moments estimation technique, the paper reveals that ease-of-doing-business indicators play a significant role in attracting foreign direct investment to the sub-region. Specifically, a percentage point improvement in the ease of starting a business in sub-Saharan Africa results in a 0.79 percentage point increase in foreign direct investment. Moreover, a percentage point improvement in tax administration, coupled with the existence of an optimal tax rate, increases foreign direct investment inflows by 0.17 percentage point. This paper contributes to the empirical literature by proposing a new model that incorporates the quantitative effects of ease-of-doing-business indicators on foreign direct investment. These findings underscore the need for policymakers to operationalize business friendly policies that permit and promote private sector development in order to attract multinational corporations.
AB - This paper investigates the empirical relationship between selected ease-of-doing-business indicators and foreign direct investment in sub-Saharan Africa. Using a panel of 45 sub-Saharan African countries covering the period 2004–2018 and the system generalized method of moments estimation technique, the paper reveals that ease-of-doing-business indicators play a significant role in attracting foreign direct investment to the sub-region. Specifically, a percentage point improvement in the ease of starting a business in sub-Saharan Africa results in a 0.79 percentage point increase in foreign direct investment. Moreover, a percentage point improvement in tax administration, coupled with the existence of an optimal tax rate, increases foreign direct investment inflows by 0.17 percentage point. This paper contributes to the empirical literature by proposing a new model that incorporates the quantitative effects of ease-of-doing-business indicators on foreign direct investment. These findings underscore the need for policymakers to operationalize business friendly policies that permit and promote private sector development in order to attract multinational corporations.
KW - Ease of doing business
KW - F01
KW - F30
KW - Foreign direct investment
KW - O10
KW - Policy reforms
KW - Sub-Saharan Africa
KW - System GMM
UR - http://www.scopus.com/inward/record.url?scp=85089743699&partnerID=8YFLogxK
U2 - 10.1007/s11294-020-09798-w
DO - 10.1007/s11294-020-09798-w
M3 - Article
AN - SCOPUS:85089743699
SN - 1083-0898
VL - 26
SP - 209
EP - 223
JO - International Advances in Economic Research
JF - International Advances in Economic Research
IS - 3
ER -