The Interrelationship Integrating Corruption-FDI, Gross Fixed Capital Formation-Export and FDI: The Case of Sub Saharan Africa

Abstract

This study seeks to investigate empirically the relationship between corruption, export, tariff and FDI in SSA countries for the period 2013 to 2017 employing sample of 24 SSA countries and applying the differenced generalized method of moment. The result of the study indicates that the lagged value of FDI, export and tariff have a negative effect on current FDI in the short run. The interaction of corruption and FDI posits a positive effect on FDI. However, the interaction of gross fixed capital formation and export has a positive and significant effect on FDI in the short run. In the long run, export and tariff posit a negative relationship and long run causality can be inferred. Interacting corruption and FDI, gross fixed capital formation and FDI have positive effect on FDI and a long run causality impact. The implication of this study is that a designed and deliberate policy must target reducing bureaucracy that promotes corruption; this would necessitate a liberalisation framework to promote a comprehensive competitive business climate to boast FDI inflow into SSA countries. In another development, operating a fairly average tariff policy that could not scare investors cannot be underscored. The consciousness of policy target is needed to improve on quality gross fixed capital formation to increase output thus promoting quality and efficient export cannot be undermined by institutions in SSA countries.