Ease of doing business and FDI inflow to Sub‐Saharan Africa and Asian countries

The purpose of this paper is to investigate the relationship between factors that influence conducting business and the inflow of foreign direct investment (FDI) to Sub‐Saharan African (SSA) and Asian countries.

The factors of business climate defined by the World Bank in 2006 as ease of doing business were correlated with FDI flows to SSA and Asian countries.

Two factors, “registering property” and “trading across borders”, were found to be related to FDI over all six years of the study (2000‐2005) for the combined sample. Also, several factors were found to be related to FDI received by SSA and Asian countries during various years.

A limitation of the study is that the sample included only SSA and Asian countries.

The findings may help SSA and other countries to improve the business climate in terms of the factors of ease of doing business, in order to attract more FDI.

The paper provides empirical support to the hypothesis that FDI is related to some of the factors of the business climate. It advances understanding of the determinants of the inflow of FDI to African and Asian countries and may be particularly useful to international organizations seeking to do business in SSA and Asian countries.