Does Quality of Host Regulation Matter in Multinational Investment Attraction? Evidence from Sub-Sahara Africa

Abstract

The study examined whether the regulatory quality matter in multinational investment inflows into the SSA region. The study utilized System GMM in investigating the relationship using a total enumeration of 48 SSA countries from 2004 to 2018. The results showed that regulatory infrastructure is weak across SSA, specifically the rule of law, control of corruption and quality of government policies formulation. The study also finds that regulatory variables individually show diverse patterns but jointly exert a significant impact on multinational investment inflow. This partly elucidates why SSA is lagging in attracting foreign investments as compared to other regional blocs in the developing countries. The policy implication of this study is for policymakers to strengthen regulations further, making policies that would promote and attract the inflows of multinational investments into SSA through strengthening the various government agencies responsible for upholding the regulatory institutions. This means that SSA governments should enhance their regulatory structures through reforms to attract more multinational inflows into the sub-region.