FDI Determinants in Least Recipient Regions: The Case of Sub‐Saharan Africa and MENA

Abstract

Abstract This paper explores the determinants of foreign direct investment (FDI) into FDI least recipient regions. Panel data for 20 sub‐Saharan Africa (SSA) and 11 Middle East and North Africa (MENA) countries are used for the period 2000–12. Findings of the fixed effects estimations suggest that FDI inflows into these regions are influenced by GDP per capita, infrastructure development, trade openness, and control of corruption. Conversely, inflation negatively affects FDI inflows, and rents from natural resources do not significantly influence FDI. Furthermore, the findings show that marginal benefits from any increase in the quantity of FDI determinants (with the exception of control of corruption) will be less for SSA countries. The paper concludes with important policy implications deduced from the findings.