International Business Management

Year: 2016
Volume: 10
Issue: 22
Page No. 5352 - 5357

The Effect of Rate of Return on Investment on Inflow of Foreign Direct Investment in Africa

Authors : Adegboye Folasade Bosede, Babajide Ayopo Abiola and Matthew Oluwatoyin Augustina

Abstract: Developing regions of the world, Africa inclusive show the greatest potential of rate of return on investment, this necessitates the fact that they should attract more foreign capital to primarily fill the existing gaps of productive factors which vividly reveals basis for their underdeveloped status. The main objective of this study is to ascertain the effect of the apparently attractive rate of return on investment has on inflow of FDI to host African countries. Panel data was utilized for 39 African countries. The results indicate that the apparently attractive rate of return on investment has no positive effect in relation to foreign direct investment for the host African countries, unlike expectations of better prospects anticipated in such host economies. The study concludes by recommending that government of host economies should discourage dependence on FDI inflow and ensure policies are put in place to enhance the economic environment of host economies to make them stimulating on their own for investment regardless of indices of rate of return on investment of host economies. This will gradually bring about stimulating and vibrant economic environment which ideally encourage investment of foreign capital as expected truly by foreign investors to that desire to take advantage of high investment returns.

How to cite this article:

Adegboye Folasade Bosede, Babajide Ayopo Abiola and Matthew Oluwatoyin Augustina, 2016. The Effect of Rate of Return on Investment on Inflow of Foreign Direct Investment in Africa. International Business Management, 10: 5352-5357.

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