Page 58 – 73 | Aminu Abdullahi, Aduma. O. Aduma

DOI: 10.30690/ijassi.41.05


The study examines the extent to which institutions; proxied by economic, political and socio-cultural factors attracts FDI into West Africa. The study employs the System Generalized Method of Moments (SGMM) dynamic panel modeling technique for the period 2010 to 2016 on cross-country samples of sixteen selected West-African countries. The findings of the study revealed that voice and accountability, political stability, regulatory quality, human capital, property rights and control of corruption has an insignificant positive influence on FDI inflow in the selected West African countries. This implies that generally, institutions are associated with FDI inflow in the region, although their coefficients are statistically insignificant during the period under study. However, government effectiveness is negatively related with FDI. Therefore, the policy direction drawn from the study is that governments in West African countries should be committed and focus more attention on institutional development for attracting FDI. Efforts should target such institutions as those that allow government bureaucracy to run effectively so as to provide the needed public goods and services in the form of basic social infrastructures. This is one of the ways that improvements in the quality of institutions to attract FDI can significantly add up both in the short-run and long-run periods. Further, the region should also, as a matter of priority, develop such institutions that promote political rights and civil liberty, building political stability and an independent and credible judicial system for enforcement of contracts and property rights protection.

Keywords: Foreign Direct Investment, Institutions, ECOWAS

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