Sustainable Development Goals and Foreign Direct Investment: A case of Sub-Saharan Africa

Nthangu, Aman Mdewa (2020) Sustainable Development Goals and Foreign Direct Investment: A case of Sub-Saharan Africa. Doctoral thesis (PhD), Manchester Metropolitan University.

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Abstract

The non-traditional influences of Foreign Direct Investment (FDI) are increasingly gaining attention in international business studies; however, the empirical evidence of these influencesis still scant. By using human capital and institutional theories, within the context of the national competitive framework, this study considers the progress towards achieving the ‘People’ category of Sustainable Development Goals (SDGs) as likely influences of FDI inflows in Sub-Saharan Africa (SSA). The study employs panel data research design and conducts fixed effects estimations to investigate the influence of progress made by SSA towards SDGs on FDI inflows. As informed by institutional theory, the analysis categorises FDI flows into global FDI, FDI from developed countries and FDI from developing countries to SSA. The analysis mainly utilises a bespoke dataset acquired from the United Nations Conference on Trade and Development (UNCTAD) as well as secondary quantitative data from trustworthy databases such as UNCTADSTAT, and the World Development Indicators (WDI). Moreover, the study employs a degree of triangulation to the quantitative data through the analysis of a limited set of interviews conducted with managers within the subsidiaries of multinational enterprises (MNEs) in Tanzania. The results support partially the claim of the increasing importance of non-traditional influences of FDI flow in that four out of five SDGs were found to be significantly associated with levels of inward FDI flows. In summary, the progress towards ‘zero hunger’, ‘no poverty’, ‘gender equality’ and ‘quality education’ were found to be significantly influencing FDI inflows to SSA. Some noted results include that a lack of progress towards ‘ending hunger’ was found to be significant and negatively affecting FDI flows from developed countries, developing countries and the globe. At the same time, ‘gender equality’ was significant for all models, however, positively influencing FDI flows from socalled ‘developed’ countries and negatively impacting global FDI and FDI flows from ‘developing’ countries. Three managers out of the four interviewed declare that all of the ‘People’ category SDGs are significantly affecting their FDI location decisions. On the other hand, the government officers interviewed argued only ‘quality education’ and ‘health and well-being’ as significant factors influencing FDI flows. This research provides further evidence that the national competitive framework can offer a thorough explanation of the factors that have different significance power in influencing FDI flows to SSA from developed and developing countries.