The Effect of Infrastructure on Foreign Direct Investment in Africa

This thesis is about the effect of (different types of) infrastructure on foreign direct investment (FDI) in Africa. The existing academic literature gives no clear indication on whether different types of infrastructure have different effects. Research on these effects is relevant for policymakers, who may invest in infrastructure to stimulate economic growth, as well as academic researchers, who should generally include the most representative proxy for infrastructure in their models regarding the determinants of FDI. The fixed effects and generalized method of moments estimations show mostly robust insignificant relationships between a wide variety of infrastructure variables and FDI. Although this was not unforeseen with respect to communication infrastructure and electricity supply, also transport infrastructure does not exert a significant influence, which is surprising given that FDI in Africa is mainly resource-driven. These findings imply that I have not found support for investments in infrastructure by African governments to attract FDI. Furthermore, given that academic researchers often use the number of telephone lines as a proxy for infrastructure, this thesis provides theoretical and empirical reasons to overthink this choice when studying the determinants of FDI in Africa.