Risk, FDI and economic growth: A dynamic panel data analysis of the determinants of FDI and its growth impact in Africa

In spite of its bountiful natural resources Sub-Saharan Africa is commonly perceived as a violent and risky place to do business. Yet, the continent whose majority of the people is trapped in poverty is in desperate need of investment to ignite economic growth, the necessary condition to reduce poverty. Countries throughout the world are competing over foreign investment because of its alleged positive externalities on growth of the host economy. Africa has been attracting significant amount of FDI since 1990s. The motivation of this dissertation is twofold: (1) identify factors that determine FDI flows to Africa: where does the continent stand and how it is doing in terms of FDI determinants and, in particular, the role of country risk; (2) and assess the contribution of foreign direct investment (versus that of domestic investment and aid) to economic growth in Africa. The study will also investigate the issue of growth convergence---to what extent FDI has been helping Africa to grow faster---and how the sectoral distribution of FDI determines the impact of FDI on growth.