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FDI and Trade Policy Openness in Sub-Saharan Africa

Godfred William Cantah (), Gabriel William Brafu-Insaidoo (), Emmanuel Wiafe () and Abass Adams
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Godfred William Cantah: Department of Economics, University of Cape Coast
Gabriel William Brafu-Insaidoo: Department of Economics, University of Cape Coast
Abass Adams: Department of Economics, University of Cape Coast

Eastern Economic Journal, 2018, vol. 44, issue 1, 97-116

Abstract: Abstract Trade openness is an important determinant of Foreign Direct Investment (FDI) inflows into Sub-Saharan Africa (SSA). Consequently, studies have examined the relationship between FDI inflows and trade openness. This study develops a new measure of trade openness to re-examine the relationship between FDI inflows and trade policy openness using principal component analysis. This new measure captures the ease of trading activities and trade tariffs. Dynamic panel estimation technique was employed to analyze the relationship between trade policy openness and FDI inflows in SSA countries. The results indicate that an open economy attracts FDI. The study recommends efforts at reducing cost of trade.

Keywords: FDI; Policy Openness; FDI; F13; F21; F41 (search for similar items in EconPapers)
Date: 2018
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