Democratic Capital, Democratic Rights and FDI in Sub‐Saharan Africa

Abstract

AbstractThis study investigates the relationship between democratic capital, democratic rights and foreign direct investment (FDI) in 42 Sub‐Saharan African (SSA) countries over the period of 1972–2014. The results show that FDI is affected by the accumulation of democratic capital to a greater extent than by contemporaneous democratic reforms or the components of democracy (civil liberties and political rights). Furthermore, FDI is found to respond positively to the recent accumulation of democratic capital in more democratic SSA countries, to the durable accumulation of democracy in less democratic countries, and by political repression in more democratic countries. Finally, sensitivity analysis shows that although the results are not significantly affected by the extent of resource dependence, they are susceptible to socio‐cultural variations, particularly among the European heritage SSA countries. Copyright © 2017 John Wiley & Sons, Ltd.