Geographical determinants of foreign direct investment: evidence from sub-Saharan Africa

Abstract

This paper investigates time-invariant geographical determinants of FDI in Sub-Saharan African (SSA). To achieve this objective, a panel data model was estimated using the Hausman-Taylor estimation technique. The estimation results show that the coefficients of time-invariant geographical variables, such as geographical size, and area located within the tropics are positive and statistically significant while the coefficient of distance from the sea is negative and statistically significant. We further disaggregated the sample into sub-regions and found consistent evidence to buttress the claim. The study recommends that SSA countries should take advantage of their geographical factors to come out with common market opportunities to maximise the potential for growth in FDI.