The effect of Sub Saharan African import Weighted Tariff policy on Foreign Direct Investment

Abstract

The share of FDI in SSA has increased but its share in the global economy is way far less compared to Asia. This study seeks to investigate  empirically the effect of SSA import weighted tariff policy on FDI, using non-stationary heterogeneous panel, the study cover a panel of 24  Sub Saharan African countries spanning the period 1988 to 2017. The study employ the Panel auto regressive distributed lag model  (ARDL) and the result of the study indicates a negative and significant relationship among import tariff, corruption and FDI implying that  import tariff, corruption posit a negative effect on FDI. However, gross fixed capital formation, law and order, export posit a positive and  significant relationship with FDI. Implication for this is that the need to consolidate on the past anti-corruption crusade cannot be  underscored. Export oriented policy is a key strategy to drive FDI inflow. SSA needs to invest heavily in home investment so as to create  an enabling environment for FDI inflow into SSA.