Political risk and foreign direct investment in Africa: the case of the Nigerian telecommunications industry

Osabutey, Ellis L. C. and Okoro, Chris (2015) Political risk and foreign direct investment in Africa: the case of the Nigerian telecommunications industry. Thunderbird International Business Review., 57 (6). pp. 417-429. ISSN 1096-4762

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Abstract

Foreign direct investment (FDI) flows are expected to be influenced by political risk factors. However, studies that evaluate the relationship between political risk and FDI flows in Sub-Saharan Africa (SSA) are scarce. This study examines the impact of political risk on FDI flows in a SSA context using the 12 political risk components published as the International Country Risk Guide (ICRG) by the Political Risk Services Group (PRS) with the Nigerian telecommunications sector as a case study. The study finds that political risk has a significant influence on the inflow of FDI into developing economies in SSA such as Nigeria and that the 12 components affect FDI in different ways. Irrespective of the political risk rating, a consistent improvement in composite political risk enhances FDI inflow. Among the 12 components, corruption, law and order, democratic accountability and investment profile were found to have significant influences on FDI inflow into the Nigerian telecommunications sector. Corruption, in particular, explains nearly two-thirds of the FDI inflow.

Item Type: Article
Research Areas: A. > Business School > International Management and Innovation
Item ID: 15866
Notes on copyright: This is the peer reviewed version of the following article: Osabutey, E. L. C. and Okoro, C. (2015), Political Risk and Foreign Direct Investment in Africa: The Case of the Nigerian Telecommunications Industry. Thunderbird International Business Review, 57: 417–429. doi:10.1002/tie.21672, which has been published in final form at http://dx.doi.org/10.1002/tie.21672. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
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Depositing User: Ellis Osabutey
Date Deposited: 11 May 2015 12:31
Last Modified: 02 Apr 2019 13:12
URI: https://eprints.mdx.ac.uk/id/eprint/15866

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