| dc.description.abstract | Our paper explores the intricate relationship between trust and foreign direct
investment (FDI) in Sub-Saharan Africa (SSA). We aim to answer the research
question: “Is there a positive relationship between trust and foreign direct
investment in Sub-Saharan Africa?” To this end, we employ a comprehensive
empirical analysis by investigating statistical significance of coefficients. Our
quantitative analysis, which employs data on trust from World Value Survey and
World Bank FDI data across SSA from 1989-2021, reveals a positive and
statistically significant relationship between trust and FDI inflows.
Our interviews with locals provide corroborative insights, emphasizing the
centrality of trust in attracting and maintaining foreign investments. Furthermore,
our research establishes a significant negative relationship between crime rate and
FDI inflows, supporting our findings on the relationship between trust and FDI.
However, the findings are constrained by limitations related to data availability,
sample size, and potential biases, which may affect the generalizability of our
results.
This paper contributes to the existing literature by substantiating the positive effect
of trust on FDI inflows, particularly in the context of SSA. It underscores the role
of trust in economic growth, crime reduction, and effective governance. It
concludes with recommendations for future research to delve into the dynamics of
trust more comprehensively and suggestions for SSA governments to leverage trust to stimulate economic growth. The findings can inform more effective policies to attract foreign investment and foster sustainable economic growth in the African
continent. | en_US |
