Abstract
The private sector plays a pivotal role in social economic development. A thriving business environment creates employment and generates returns that can be re-invested both domestically and internationally. Unfortunately, there has been scanty scholarly exploration on how improvements in doing business environment affect foreign direct investments. For that reason, this paper intended to establish how improvements in doing business environment affect the flow of foreign direct investments into the eastern Africa region. The study used panel data, maintained by the World Bank from 12 eastern Africa countries for the period 2004 through 2017. The World Bank has profiled 11 parameters to define doing business environment, namely; doing business, starting a business, dealing with construction permits, getting electricity, registering property and getting credit. Others include, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. GDP per capita, trade openness and Labour Force controlled the relationship between ease of doing business and FDI. Using OLS regression on Pooled data, the paper established a significant influence of ease of doing business variables on FDI. Therefore, the paper concluded that FDI follows the size and quality of the market and production efficiency. Then, the paper advises governments to enact adequate regulations that support the development of the private sector.
Highlights
In 2015, the United Nations coined together 17 sustainable development goals (SDGs) with an ultimate aim of balancing the economic, social and ecological extents of sustainable development by the year 2030 (Mercer, 2018)
The purpose of this study was to establish the link between foreign direct investment inflows and ease of doing business
It was established that ease of doing business significantly influence the flow of foreign direct investments into the eastern Africa region
Summary
In 2015, the United Nations coined together 17 sustainable development goals (SDGs) with an ultimate aim of balancing the economic, social and ecological extents of sustainable development by the year 2030 (Mercer, 2018). SDGs 6-9 and 13 focus on infrastructure development. SDG 8 advocates for full and productive employment and decent work for all, by the year 2030, and SDG 9 promotes building of irrepressible infrastructure, all-encompassing and maintainable industrialization and nurturing innovation (United Nations, 2015). The African union adopted agenda 2063, composed of 7 aspirations with an objective of delivering a prosperous continent to the generation. Aspiration 1 envisages a flourishing Africa grounded on inclusive growth and sustainable development (Africa Union Commission, 2015). There is need for proper coordination among governments, non-governmental organizations and the private sector (Mercer, 2018) which are key in economic development
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