The relationship between FDI, political risk and institutional quality in sub-Saharan Africa

This study investigates the relationship between FDI, political risk, and institutional quality in 20 sub-Saharan African countries over the period from 2003 to 2019. GMM analysis finds that FDI is attracted to SSA by declining political risk and improved institutional quality but resource extractive SSA economies tend to attract more FDI. The results further show that although FDI investors are more concerned about regulatory and institutional investment protection than with political risk in resource dependent SSA countries, political risk is a more efficient intermediator than institutional quality in attracting FDI to resource dependent SSA countries.