For years, studies have generally accepted Foreign Direct Investment as having a positive influence on the host economy. And governments in Sub-Saharan Africa, seeking to attract more private investments have been committed into reforms aimed at improving their business regulation. This study is meant to possibly connect these government actions, for which the World Bank’s ;;Ease of Doing Business Indicators’ were used as a proxy, to foreign direct investment inflows in Sub-Saharan Africa. Through a panel data analysis, the research was done by running a random effects model to find a relationship between changes in inward foreign direct investment and the Doing Business Indicators, namely, time to start a business, cost to start a business, time to register property, and cost to register property, time to import, and time to export, for a set of forty Sub-Saharan Countries. Results suggest that, on average, the time for starting a business and the cost for property registration have a negative and significant correlation with Foreign Direct Investment. In other words, by reducing the number of days to start a business, and reducing the cost for property registration, a country can attract a large amount of FDI. However, results suggest an insignificant (albeit negative) association between the cost to start a business, time to register property, time to import, time to export and FDI. However, this result should be taken with caution given that it refers to forty Sub-Saharan African Countries, using data across a seven-year time period, suggesting that a more refined study, with a longer time period will help fix this problem.Key Words: Foreign Direct Investment, Fragile States, Starting a Business, Registering Property, Trading Across Borders
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Foreign Direct Investment in Sub-Saharan African Countries: Does the Business Regulation Matter?
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