The Location Determinants of FDI in Sudan. Time Series – Empirical Analysis From 1980-2018

Peter Kuot Madit Chol
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Peter Kuot Madit Chol: School of International Trade and Economics, University of International Business and Economics, UIBE, Beijing, China.

International Journal of Science and Business, 2020, vol. 4, issue 7, 26-45

Abstract: This paper study the location determinants of FDI inflow in Sudan, the study applied multivariate time series, Vector auto-regression using time-series data of 1980-2018. Variable include; market size, infrastructure, inflation rate, Debt, Dummy of investment incentive, and Terms of Trade openness. The empirical results revealed that there is a short-run causality relationship running from independents variable to FDI as specified in the study. Also, GDP, External debt, investment incentive, and inflation are important location determinants of FDI inflows to Sudan. The Granger Causality shows Uni-directional causality running from GDP, Inflation, TOP, inflation, and Dummy investment incentives to FDI. These results were consistent with the short-run vector autoregression results. Therefore for a country to be declared as attractive by MNC, it means that the above factors have to be significant, since the variable for infrastructure and terms of trade openness are insignificant, investors would choose to neglect Sudan. The outcome shows that GDP is a very important variable in determining the location choice of FDI. This suggests that authorities need to take into account factors that hamper the growth of the economy given its importance in attracting FDI inflows. Finally, Sudan should implements policies to encourage a fast-growing economy by improving its debt service payment, infrastructure, and its terms of trade openness and international cooperation.

Keywords: Location determinants of FDI; Unit root; Cointegration; VAR Model; and Granger Causality (search for similar items in EconPapers)
Date: 2020
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