PUSH AND PULL FACTORS AS DETERMINANTS OF FOREIGN DIRECT INVESTMENT: PANEL EVIDENCE FROM AFRICAN ECONOMIES

Abstract

Foreign direct investment (FDI) plays a significant role in economic growth and development in African economies. While a range of factors affect FDI inflows, the examination of "push" and "pull" factors as key determinants has been sparse in the empirical literature. Hence, this study analyzed the "push" and "pull" impacts of foreign direct investment inflows in Africa spanning from 1996 to 2022. Thus, unlike previous studies, the current study employed static panel estimation methods to examine the determinants of FDI inflows in Africa. The findings of the fixed effect panel technique revealed that push factors have a negative and significant relationship with FDI inflows in Africa, suggesting that the poor performance of push factors in the recipient countries will discourage the inflows of FDI in Africa. Hence, recipient countries should adopt a push factors policy that would increase the inflows of foreign direct investment in African countries. Meanwhile, the pull factors do not determine FDI inflows in Africa during the period of investigation. Therefore, policymakers should adopt effective policy measures that make push factors responsive to attract more foreign investors.