Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa

Rodolphe Desbordes and Azémar, Céline

No 2008-23, SIRE Discussion Papers from Scottish Institute for Research in Economics (SIRE)

Abstract: In this paper we diverge from the existing empirical literature on FDI determinants in two ways. First, we decompose the sources of the foreign direct investment (FDI) gap between Sub-Saharan Africa (SSA) and other developing regions. Once market size has been accounted for, we nd that SSA's FDI de cit is mostly explained by insufficient provision of public goods: low human capital accumulation, especially health, in SSA explains 100-140% of the inter-regional FDI gaps. Second, we estimate the indirect effect of infectious diseases on FDI through their direct impact on health. We find that a 1% point rise in HIV prevalence in the adult population is associated with a decrease in net FDI inflows of 3.5%, while a country in which 100% of the population is at risk of contracting deadly malaria receives about 16% less FDI than a similar country located in a malaria-free region.

Keywords: Public Governance; Foreign Direct Investment; Health (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa (2009)
Working Paper: Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:sirdps:36

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