Economics

| Peer-Reviewed |

Foreign Direct Investment an Engine for Development: Factors Determining Its Inflow to the Sudan

Received: 19 August 2015    Accepted: 01 September 2015    Published: 14 September 2015
Views:       Downloads:

Share This Article

Abstract

The study was carried out to establish the possible factors that determine the inflow of Foreign Direct Investment into the Sudan. Using OLS and annual time series data for the period 1980 to 2011, the study established that variables that determine inflow of FDI both in the long-run and short-run for the Sudan are the market size and the level of development. While infrastructure development and financial sector development have been the determining factors for the FDI flow to the country in the long-run, they do not posses any effect on the FDI flow into the country in the short-run. Additionally, inflation as a proxy for macroeconomic instability and openness of the economy to the out side world have been effective in determining the inflow of the FDI to the Sudan in the short-run but do not have any impact on the FDI flow to the country in the long run. The ECM term in the short-run dynamics shows that FDI was above its equilibrium value and has been moving downwards towards its equilibrium value, however, with low speed of adjustment towards its equilibrium value. As much as the study succeeded in attaining its objectives, the study suffers from lack of data for some variables and this has reduced the findings of the study. Additionally, with the break away of southern part of the country (now South Sudan), coupled with the civil war in the country, Sudan is likely to lose out foreign investors.

DOI 10.11648/j.eco.20150405.12
Published in Economics (Volume 4, Issue 5, October 2015)
Page(s) 81-89
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

FDI, Sudan, Determinants, Unit Root, ECM

References
[1] Anyanwu, J. C. 2011. Determinants of Foreign Direct Investment Inflows to Africa, 1980-2007, African Development Bank, Tunis.
[2] …. 2012. Why Does Foreign Direct Investment GO where It Goes? New Evidence from African Countries, ANNALS OF ECONOMICS AND FINANCE 13-2, 425-462.
[3] Anyanwu, J. C. & Erhijakpor, A. E. O. 2004. Trends and Determinants of Foreign Direct Investment in Africa, West African Journal of Monetary and Economic Integration, Second Half, 21-44.
[4] Asiedu, E. 2002. On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different? World Development, Vol. 30, No. 1, pp. 107 – 119.
[5] Abdullai, D. N. 2007. Attracting Foreign Direct Investment for Growth and Development in Sub- Saharan Africa: Policy Options and Strategic Alternatives, Vol. XXXII (2), CODESRIA, Senegal.
[6] Brima, S. 2015. Macroeconomic Determinants of Foreign Direct Investment in Sierra Leone: An Empirical Analysis, International Journal of Economics and Finance, Vol. 7, No. 3, pp. 123 -133.
[7] Bronigen, B. A. 2005. A Review of the empirical Literature on FDI Determinants, University of Oregon and NBER.
[8] Charemza, W. W. & Deadman, D.F. 1997. New Directions in Econometric Practice: General to Specific Modeling, Cointegration and Vector Autoregression, Edward Elgar Publishing Ltd, UK.
[9] Cypher, J. M. & Dietz, J. L. 2004. The process of Economic Development, 2nd ed., Routledge, UK.
[10] Dicken, P. 1992. Global Shift: The Internalization of Economic Activity, 2nd ed., Paul Chapman Publishing Ltd, UK.
[11] Dickey, D. A. & Fuller, W. A.1979. Distribution of the Estimators for Autoregressive Time Series with a Unit Root, Journal of the American Statistical Association, Vol.74, pp. 427 – 431.
[12] Engle, R. F. and Granger, C. W. J. 1987. Cointegration and Error Correction: Representation, Estimation and Testing, Econometrica. Vol. 55 (2), pp. 251–276.
[13] Feinberg, R. E. & Kallab, V.1986. Investing in Development: New Roles for Private Capital? Overseas Development Council, Washington, DC.
[14] Fiesta, I. & Sinha, S. 2011. Constraints to Private Investment in the Poorest Developing Economies – A review of the literature, Nathan Associates London Ltd., UK.
[15] Gadkarim, H. A. 2012. Will the Sudanese Paradox Continue? Insecure investment climate and substantial foreign direct investment inflows, Sudan Report, CMI.
[16] Gujarati, D. 2011. Econometrics by Examples, Palgrave Macmillan, USA.
[17] Gujurati, D. N. at al. 2009. Basic Econometrics, 5th ed., Tata McGraw Hill Education Private Ltd, New Delhi.
[18] Haile, G. & Assefa, H.2006. Determinants of foreign Direct Investment in Ethiopia, A Time Series Analysis, University of Westminster, UK.
[19] Hayani, Y. 2001. Development Economics: From Poverty to the Wealth of Nations, Oxford University Press.
[20] Hussain, F. & Kimuli, C. K. 2012. Determinants of Foreign Direct Investment Flows to Developing Countries, SBP Research Bulletin, Vol. 8(1).
[21] MacKinnon, J. 1991. Critical Values for Cointegration Tests”, in Kerry Patterson (2000), An Introduction to Applied Econometrics: A Time Series Approach, MacMillan.
[22] Nasser, O. M. A & Gomez, X. G. 2009. Do well-Functioning Systems Affect the FDI Flows to Latin America? International Research Journal of Finance and Economics, Issue 29, 60-75.
[23] Nonnemberg, M. B. & Mendonca, M. J. C. (n.d). The Determinants of Foreign Direct Investment in Development Countries, Institute de Pesquisa Economica Applicada, Brazil.
[24] Ocampo, J.A. eds. 2007. International Finance and Development, United Nations, New York, USA.
[25] Quazi, R. M. 2007. Investment Climate and Foreign Direct Investment: A Study of Selected Countries in Latin America, Global Journal of Business Research, Vo. 1 (2).
[26] Salvadori, N. et al, eds.2009. Geography, Structural Change and Economic Development: Theory and Empirics, Edward Elgar publishing Ltd, Inc., William Pratt House, UK.
[27] Sichei, M. M. & Kinyondo, G. 2012. Determinants of Foreign Direct Investment in Africa: A Panel Data Analysis, GLOBAL JOURNAL OF MANAGEMENT AND BUSINESS RESEARCH, Vol. 12 (18).
[28] Sikwila, M. N. 2015. Foreign Direct Investment, does it matter? A case for Zimbabwe, Research in Business and Economics Journal, Vol. 11, pp. 1 – 12.
[29] Todaro, M.P & Smith, S. C. 2003. Economic Development: Pearson Education Limited, UK.
[30] United Nations. 2007. International Finance and Development, UN publications, New York, USA.
[31] UNCTAD. 1995. Foreign Direct Investment in Africa, United Nations Conference on Trade and Development, Division on Transnational Corporations and Investment, Series A, No. 28, Geneva.
[32] …. 1996. Incentives and Foreign Direct Investment in Africa, United Nations Conference on Trade and Development, Division on Transnational Corporations and Investment, Series A, No. 30, Geneva.
[33] …. 1998. Foreign Direct Investment: Trends and Determinants, United Nations Geneva.
[34] Walsh, J. P. & Yu, J. 2010. Determinants of Foreign Direct Investment: A Sectoral and Institutional Approach, IMF Working paper, WP/10/187.
Author Information
  • Department of Economics, CSES, University of Juba, Juba, South Sudan

Cite This Article
  • APA Style

    Emmanuel Pitia Zacharia Lado. (2015). Foreign Direct Investment an Engine for Development: Factors Determining Its Inflow to the Sudan. Economics, 4(5), 81-89. https://doi.org/10.11648/j.eco.20150405.12

    Copy | Download

    ACS Style

    Emmanuel Pitia Zacharia Lado. Foreign Direct Investment an Engine for Development: Factors Determining Its Inflow to the Sudan. Economics. 2015, 4(5), 81-89. doi: 10.11648/j.eco.20150405.12

    Copy | Download

    AMA Style

    Emmanuel Pitia Zacharia Lado. Foreign Direct Investment an Engine for Development: Factors Determining Its Inflow to the Sudan. Economics. 2015;4(5):81-89. doi: 10.11648/j.eco.20150405.12

    Copy | Download

  • @article{10.11648/j.eco.20150405.12,
      author = {Emmanuel Pitia Zacharia Lado},
      title = {Foreign Direct Investment an Engine for Development: Factors Determining Its Inflow to the Sudan},
      journal = {Economics},
      volume = {4},
      number = {5},
      pages = {81-89},
      doi = {10.11648/j.eco.20150405.12},
      url = {https://doi.org/10.11648/j.eco.20150405.12},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.eco.20150405.12},
      abstract = {The study was carried out to establish the possible factors that determine the inflow of Foreign Direct Investment into the Sudan. Using OLS and annual time series data for the period 1980 to 2011, the study established that variables that determine inflow of FDI both in the long-run and short-run for the Sudan are the market size and the level of development. While infrastructure development and financial sector development have been the determining factors for the FDI flow to the country in the long-run, they do not posses any effect on the FDI flow into the country in the short-run. Additionally, inflation as a proxy for macroeconomic instability and openness of the economy to the out side world have been effective in determining the inflow of the FDI to the Sudan in the short-run but do not have any impact on the FDI flow to the country in the long run. The ECM term in the short-run dynamics shows that FDI was above its equilibrium value and has been moving downwards towards its equilibrium value, however, with low speed of adjustment towards its equilibrium value. As much as the study succeeded in attaining its objectives, the study suffers from lack of data for some variables and this has reduced the findings of the study. Additionally, with the break away of southern part of the country (now South Sudan), coupled with the civil war in the country, Sudan is likely to lose out foreign investors.},
     year = {2015}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Foreign Direct Investment an Engine for Development: Factors Determining Its Inflow to the Sudan
    AU  - Emmanuel Pitia Zacharia Lado
    Y1  - 2015/09/14
    PY  - 2015
    N1  - https://doi.org/10.11648/j.eco.20150405.12
    DO  - 10.11648/j.eco.20150405.12
    T2  - Economics
    JF  - Economics
    JO  - Economics
    SP  - 81
    EP  - 89
    PB  - Science Publishing Group
    SN  - 2376-6603
    UR  - https://doi.org/10.11648/j.eco.20150405.12
    AB  - The study was carried out to establish the possible factors that determine the inflow of Foreign Direct Investment into the Sudan. Using OLS and annual time series data for the period 1980 to 2011, the study established that variables that determine inflow of FDI both in the long-run and short-run for the Sudan are the market size and the level of development. While infrastructure development and financial sector development have been the determining factors for the FDI flow to the country in the long-run, they do not posses any effect on the FDI flow into the country in the short-run. Additionally, inflation as a proxy for macroeconomic instability and openness of the economy to the out side world have been effective in determining the inflow of the FDI to the Sudan in the short-run but do not have any impact on the FDI flow to the country in the long run. The ECM term in the short-run dynamics shows that FDI was above its equilibrium value and has been moving downwards towards its equilibrium value, however, with low speed of adjustment towards its equilibrium value. As much as the study succeeded in attaining its objectives, the study suffers from lack of data for some variables and this has reduced the findings of the study. Additionally, with the break away of southern part of the country (now South Sudan), coupled with the civil war in the country, Sudan is likely to lose out foreign investors.
    VL  - 4
    IS  - 5
    ER  - 

    Copy | Download

  • Sections