Impact of Foreign Direct Investment on the Economic Growth of Sub-Saharan African Countries

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Sub-Saharan African countries are developing countries that have been trying to achieve sustainable growth after years of colonialism. Despite a rich reserve in natural resources, nowadays they face higher levels of poverty and inequality, political instability, and inadequate institutional frameworks. This thesis attempts to investigate the impact of institutional indicators such as the rule of law in mediating the relationship between Foreign Direct Investment (FDI) and economic growth in Sub-Saharan African Countries. The research will be conducted by comparing Sub-Saharan African Countries with 59 randomly selected countries with different geographic locations, resource availability, population growth, inflation level and economic growth. Aiming to determine whether institutional factors (rule of law) contribute to higher levels of FDI impact and economic growth. The data I will analyze cover the period 2002-2022. The model used for the study is regression analysis, specifically Ordinary Least Squares (OLS). The research proofs that the institutional quality in fact could mediate the relationship between FDI and economic growth of Sub-Saharan Africa countries. However, there are some other factors that were not included in this research but it also influences the economic growth of the hosting countries such as human capital, accessibility to technology, availability of infrastructure, and trade openness.

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Foreign Direct Investment, Economic Growth, Institutional Quality, Sub-Saharan Africa
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