Impact of Trade Openness on Foreign Direct Investment in Sub Saharan Africa Countries

Abstract

No country in the world that is stay isolated and become developed without influence of other countries in one way or the other. Countries in the world are working hard through various economic policies in order to attract more Foreign Direct Investment (FDI). Therefore any attempt to find out the influence of FDI is paramount important. The paper seek to look into the impact of trade openness on Foreign Direct Investment in Sub-Sahara African Countries for the period of 2000 to 2017. The study employed panel data analysis, including the panel unit root test, panel co integration test and fully modified least square method (FMOLS). The findings reveal that, all the variables were cointegration of order one and having a long run relationship. More so the results show that trade openness was positive and statistically significant in influencing FDI in the region, while corruption was negative and statistically significant in influencing FDI in the region. The findings suggest that, the existing trade policies should be amend by governments through various legislative arms of government to give room for inflow of capital and new technological advancement from developed countries where these FDI comes from to those countries under study. Also Governments in the region should create more polices that is used to reduce the level of corruption in the system through improvement of the existing institutions that fight corruption to a standstill.