Inward Foreign Direct Investment in Sub Saharan Africa - Dissertation Example

?Data Discussion The data collected at the beginning of this research sheds considerable light on the pattern of growth of the countries in the Sub-Saharan region. On studying this, several phenomena about the level of economic growth in the region can be explained. The countries with the highest GDP among these countries are Algeria, Angola, Cameroon, Egypt, Ethiopia and Uganda. Although these countries have depicted high GDP growth over the period of fifty-two years, there is considerable fluctuation in the data. This shows that these countries have not grown consistently over the period. The countries with maximum GDP growth have been identified from the literature review. I have picked out six countries that have the highest GDP growth from among the fifty-two countries in the Sub-Saharan region. Existing literature shows that these six countries have made consistent level of economic activities since the 1960s. This has been validated later on in this research with the help of quantitative analysis made on the data collected. GDP growth rates for Angola, Ethiopia and Uganda cannot be evaluated for the years before 1980s due to lack of availability of data. A significant similarity between Angola, Algeria and Cameroon is that GDP growth for these countries has been very low (Algeria) or negative (Angola and Cameroon) in 1992. HDI for Cameroon has been studied only for the years 1980, 1990, 2000 and 2010 since data for other years are not available. However, for Egypt, Ethiopia and Uganda the GDP growth in 1992 has been positive. Among these countries, Cameroon shows the lowest level of GDP growth. Figure: GDP growth of Cameroon and its level of Human Development Index Yet, to one’s surprise, it is found that the HDI for the country shot up after 2000 and has remained high since then. In fact the HDI has improved for all these countries in the beginning of the twenty first century. The GDP of Egypt and Uganda have been better than all the other countries in the Sub-Saharan region. Due to lack of sufficient data GDP of these countries have been studied since the year 1983. It is interesting to note this fact since, in the analysis section of this paper these GDP trends would help us determine the factors that positively attract FDI or demotivate foreign investors from investing in these countries. These factors also help in correlating the drivers of human development, and thus poverty alleviation in these countries. The data shows that the GDP of Egypt shows declining trend after 1998 and that of Uganda falls consistently after 2006. Although, in Egypt, GDP growth reached a local high in 2007, it has been decreasing consistently since then. Figure: GDP growth of Egypt and Uganda This shows that there are certain factors that have affected the overall productivity in these countries. However, surprisingly level of HDI growth has improved in both countries after 2003. Sufficient information for HDI for both Egypt and Uganda has not been available for the years before 1999. Therefore, HDI in the countries during these years could not be compared. Figure: HDI growth of Egypt and Uganda This is a sharp increase and HDI has remained high since then without fluctuating. This reveals that although GDP is commonly considered the measure of growth, for many developing countries it does not reflect the true level of development of the economy. Hence, human development index should be considered while studying the level of economic development for these countries. In the analysis section, I have studied the level of openness to trade of the countries that display the most contrasting features. The contrasting characteristics of the two countries, Uganda and Cameroon, make it important to make an in depth study of the factors affecting the economic activities of these countries. According to the data, level of economic growth in Algeria, as depicted by the GDP growth of the country, has been high since the beginning of the 1960s. Data for HDI is not available for all consecutive years; information regarding HDI for Algeria has been collected for the years 1980, 1990 and 2000. From this data it can be seen that GDP values are increasing over the years. In 1963, the country reached the highest level of GDP by crossing 34 billion USD. This has been supported by high level of government expenditure. Government spending in the preceding three years has been high, after which the amount fell and remained consistently low, until 1988, when the government spending again increased. Figure: GDP growth of Algeria and its level of Human Development Index The data suggests that there has been enrolment in public and private programs since the year 1971. The effect of such enrolment is seen in the form of high HDI growth in 1977. Adult literacy rate has also increased during this period. The effect of these factors was realised in the form of steadily rising HDI after 1980. Till date, HDI of 2000 has been found to be the highest. This trend is important since every ten years the country is showing improvement in its HDI, which would cast definite positive impact on poverty alleviation. A very interesting fact for Angola is represented in the data set. Data for GDP growth and HDI is not available for the initial years. Data regarding GDP growth has been collected from 1984 and for HDI data has been collected for the year 1999 and afterwards. From this data it can be seen that the level of human development in the country rose in 1999 but fell sharply between 2000 and 2005. The GDP in Angola was quite low in 1999, but it rose between 2002 and 2008. Figure: GDP growth of Angola and its level of Human Development Index This anomaly might be explained in terms of environmental factors that affect the level of human development. Although during mid 2000, GDP increased; corruption rate also rapidly increased. There was high inequality due to which overall development of the society was hampered. Data for GDP growth of Ethiopia is available since 1981 and for HDI since 2000. The GDP of Ethiopia fell in 1984 and 1991, but growth rate in this country gained pace after 2002. Ethiopia’s GDP shows a sharp improvement since then. HDI in this country also shows consistency with the rate of growth of GDP. HDI in Ethiopia has been increasing since 2004. Figure: GDP growth of Ethiopia and its level of Human Development Index During all these years, GDP of Cameroon has remained lower than the other countries. It is important to notice the pattern of GDP growth since, this data gives a clear notification of the fact that the factors affecting GDP growth in the economy do not function in a similar pattern in all economies in the Sub-Saharan region. This would help in proper identification of the way in which FDI inflow influences the economy of Sub-Saharan region as a whole. Read More