Determinants of Foreign Investment and International Aid for Meeting the Sustainable Development Goals in Africa: A Visual Cognitive Review of the Literature

Abstract

The sustainable development goals (SDGs) have recently framed sustainable development priorities in both developed and developing countries. External funding in the form of foreign direct investment (FDI) and official development assistance (ODA) is necessary for achieving practically all of the SDGs and their underlying targets. However, it is not always clear how this funding is allocated between different SDG priorities in Africa, and the factors that influence the ability to attract and effectively use FDI and ODA. We conduct a literature review and an analysis of financial flow data to identify (a) the SDGs mainly targeted by ODA in Africa; (b) the research priorities related to the SDGs in Africa and (c) the factors that attract or drive away FDI and ODA in Africa. Overall, there is a clear mismatch between academic research priorities related to SGDs and actual financial flows for SDGs in Africa. This presents potential risks for poor allocation of resources across the multiple sustainability domains represented by the SDGs. Various economic, institutional and political factors influence how FDIs and ODA are attracted and effectively used in Africa. Based on the literature, we identify a series of approaches to overcoming the obstacles to attracting FDIs and ODA. We group these proposals into five categories, namely: (a) capacity building, (b) liberalization and deregulation, (c) regulation and incentives, (d) partnerships and (e) regional integration.