The Nexus between Economic Complexity and Foreign Direct Investment in Sub-Saharan Africa

Abstract

This study seeks to explore the relationship between economic complexity and foreign direct investment in Sub-Saharan African countries from 1998 to 2019. Using the ordinary least square technique, the study reveal that economic complexity in a global sense is affected positively and significantly by Foreign Direct Investment (FDI) in this region. This result was reinforced through the use of fixed effects hypothesis estimations as well as quantile regression. The findings also suggest that Gross Domestic product (GDP), trade, urbanization and education contributes to the economic sophistication of economies in Sub-Saharan Africa. Hence, policies such as investment promotion, provision of credit facilities by financial institutions, product diversification, specialization, innovation and the practice of good governance should be implemented so as to boost FDI which will go a long way contributing to the economic complexity of these economies.