Determinants of foreign direct investment in conflict regions: cases in Central Sub-Saharan Africa

Abstract

The aim of this dissertation is to analyze which determinants are most important to attract FDI to countries in Central Sub-Saharan Africa, and what conflict-riddled regions with large amounts of contested natural resources can do to attract or detract foreign direct investment. This region in Sub-Saharan Africa has generally been underserved in the attention paid to it in terms of how it attracts FDI. The study uses a mixed methods approach to apply case studies to the Democratic Republic of Congo, Republic of Congo, Angola and Uganda. An OLS regression analysis will show if the observed trends in the cases match up with empirical evidence and are more generalizable across all of Sub-Saharan Africa. The independent variable will be net FDI inflows. The independent variables will be corruption, democratic score (for institutional and governmental strength), resource wealth, the degree of trade openness, internal conflict and conflict intensity from the years 1990-2014. The findings suggest that increased internal conflict does not always have a negative link with FDI in the region because of other favorable circumstances: mainly the presence of natural resources, attractive trade policies and openness, infrastructure, and corruption that helps facilitate export-oriented FDI through increased short-term costs for long-term access to valuable resources.