Empirical Analysis Of The Effect Of Foreign Direct Investment On Health Status In Sub-Saharan Africa: What Role For Governance?

Abstract

Purpose of the study: This study aims to empirically examine how governance affects FDI's impact on the health of inhabitants in Sub-Saharan Africa as indicated by the region's infant and child mortality rates. Methodology: The econometric approach is employed in this study. A dynamic panel model is used for a sample of 44 Sub-Saharan African nations encompassing 2002 to 2019 to produce empirical results. The Generalized Method of Moments (GMM) approach is utilized to accomplish the goals per the research and data established. Main Findings: According to the study's results, foreign direct investment (FDI) considerably improves health by lowering baby and child mortality rates. The findings of this study also indicate that better governance, notably the prevention of corruption, has a positive impact on FDI. Research limitation: The lack of data on a long series is the study's primary limitation. Future studies can concentrate on examining the role of governance in the long-term relationship between FDI and health, with a focus on the marginal impact of the two factors' interplay on health. As a result, it would be important to examine how sectoral FDI affects health outcomes in order to identify the primary pathways by which FDI can reliably affect population health. Novelty/Originality of the study: This study is unique from other studies in that it suggests that efforts must be taken to fully capitalize on the benefits of FDI. In order to reach health goals, policymakers must use sound ways to enhance governance indicators in order to attract FDI further. Additionally, the quality of governance is a high key influencer of the characteristics that attract investors.