Biståndets påverkan på utländska direktinvesteringar - En kvantitativ studie över sambandet mellan bistånd och FDI i Afrika söder om Sahara

Abstract

The following thesis investigates the relationship between foreign aid and foreign direct investment in Sub-Saharan Africa. The data used in this thesis consists of country-level factors between the period 2005 and 2017. For a more detailed analysis foreign aid is divided into two groups – foreign aid in the form of physical capital and foreign aid with the aim to support and streamline the use of the capital stock. By implementing known research methods in the field of study as well as including additional control variables, this thesis seeks to shed new light on the alleged relationship between foreign aid and foreign direct investment. Moreover, this thesis contributes to the literature by examining a geographical area not yet covered in this field of study. The data analysis is based on the fixed effects model. Although no direct relationship can be determined between foreign aid and foreign direct investment, this study still provides interesting findings. It is plausible that aid aimed to support the capital stock has a positive effect on FDI. Aid aimed solely on physical capital has an ambiguous effect on FDI. In the short term, this type of aid seems to have a negative effect on FDI. It should be noted that the variable is insignificant throughout all regressions run in this thesis. In the long term on the other hand, aid aimed towards physical capital has a significant positive effect on FDI. The relationship between total aid and FDI can therefore not be determined.