Institutional quality and the attractiveness of foreign direct investment in Africa

Abstract

The objective of this article is to evaluate the role of institutional quality in the attractiveness of foreign direct investment (FDI) in Africa. To do so, we have used the method of generalized moments (MGM) in a system on a panel of 30 countries, over the period 2002-2020. The results show that the quality of institutions positively and significantly affects the attractiveness of FDI. This is reflected in the control of corruption, the rule of law, freedom of expression, the quality of regulation, the quality of public service and political stability. These results call on African governments to improve these dimensions, in order to attract more FDI.