The Impact of FDI in Sub-Saharan Africa - Essay Example

Another study by John C. Anyanwu (2012), who wrote the article Why Does Foreign Direct Investment Go Where It Goes?: New Evidence from African Countries, seeks to understand how the factors affecting the development of FDI will help the policymakers of Sub-Saharan African Countries in the formulation and execution of policies for attracting FDI. In this study, they used cross-country regressions for the period 1996-2008. Because they used cross-sectional data, they had to carry out four different empirical techniques to add more weight to their empirical results (Anyanwu, 2012:451).

These techniques include robust pooled ordinary least squares (OLS), the feasible generalized least squares (FGLS), both OLS and FGLS methods to check historical data, and finally, the two-step (IV) efficient, generalized method of moments (GMM). These techniques ensured that the results are relevant to the African continent, its sub-regions, and individual countries (Anyanwu, 2012:452).There is another study done by Ajayi (2006) titled The Determinants of Foreign Direct Investment in Africa: A Survey of the Evidence.

In this study, they used case studies of countries under consideration as a way of collecting information about FDI. Their main area of focus in these case studies was identifying the common point that unites various factors that attract FDI to a country. They also sought to find out specific factors about some countries and see whether they could be successfully and beneficially applied to others (Ajayi, 2006:14). From these studies, we get to understand the magnitudes and makeup of FDI, trends, factors affecting the flows of FDI to the country, the current state of the country with regards to FDI, and the policies enacted to attract FDI (Ajayi, 2006:15).

The fourth article I will look at in this paper is an article by Sarumi Adewumi titled; The Impact of FDI on Growth in Developing Countries: An African Experience. The article looks at how FDI has contributed to African economic growth by using the techniques of graphical and regression analysis. With the help of data in the time set of 1970 to 2003, they used empirical analysis to examine the information from Sub-Saharan African countries. From this study, they came up with the inference that there is a positive but insignificant contribution of FDI to economic growth.

(Adewumi, 2006: 8).