Interrogating Factors That Influence Foreign Direct Investment (FDI) In Developing Countries
Oluwagbenga Emmanuel Adebayo
Keywords: FDI, political stability, institutional quality, geopolitics, sustainable development
Abstract
Foreign Direct Investment (FDI), which is a major contributor to the economic growth and development in many developing countries, including African countries, has been decreasing in some of these countries. This paper synthesized empirical literature on the effect of political stability, geopolitical risk, institutional quality and corruption on FDI across several developing countries. The paper relied on diverse econometric methods, including FMOLS, ARDL and GMM. The results revealed that while some studies reveal that higher level of political stability encourages FDI, some indicated that its effect is insignificant. Moreover, some studies revealed that seemingly undesirable political conditions might attract FDI. The narrative review also captures the influence of institutional quality, political stability and geopolitical risk on FDI inflows. Existing literature yields empirical evidence based on data from various African nations. Hence, this study recommends that governments, regulatory agencies, and policymakers should strengthen institutional quality and implement sustainable policies that create stable political environments that attract FDI with the aim of promoting sustainable development.
Author Biography
Oluwagbenga Emmanuel Adebayo
Department of Economics, Modibbo Adama University, Yola, Nigeria