The Role of Transport Infrastructure in FDI: Evidence from Africa using GMM Estimates

This paper analyses the role of infrastructure availability, particularly with respect to transportation, in determining the attractiveness of Foreign Direct Investment (FDI) inflows for the case of thirty-three African economies. Using both the static and dynamic panel data approach, available transportation is seen to have contributed to the relative attractiveness of the countries in our sample. Foreign direct investors are also sensitive of other measures of infrastructure, though to a lesser extent than to transportation. FDI flows to African economies are further confirmed to be resource-seeking as well as market-seeking. Interestingly, the study also establishes the presence of dynamism in FDI modelling. ? 2009 LSE and the University of Bath