| Corruption is a worldwide problem hindering economies through several channels which include, but are not limited to, a reduction in domestic and foreign direct investments, and the misallocation of budgetary funds for education, health, and infrastructure. Based on a sample of ten sub-Sahara African states between 1997 and 2011, ordinary least square regression is used to determine the causal effect that corruption has on foreign direct investment (FDI) inflows. The results robustly confirm that corruption negatively impacts FDI inflows into these economies. The results also support previous studies that credit availability, the level of human capital, the inflation rate, infrastructure, political instability, and the extent of urban population are found to be important in attracting FDI to host countries. The results generally imply that the governments of these countries need to strongly and strictly enforce their anti-corruption laws, while developing the levels of human capital and infrastructure. |
