Abstract:
The study examines the effects of institutions and foreign direct investment on
domestic investment in Sub-Saharan Africa (SSA) from 2006-2017. To achieve the
objectives of the study, fixed and random effects estimation techniques were
employed on annual panel data of 28 countries in Sub-Saharan Africa. Institutional
variables (institutions) were found to have positive effects on domestic investment
in SSA. Good institutions, therefore, contribute to increasing domestic investment
in SSA. Again, the results indicate that an enhancement of government
effectiveness in the presence of foreign direct investment, domestic private
investment increases. The results also disclosed that institutions in general have
positive effects on domestic private investment. The study, therefore, recommends
that governments of SSA through their respective public and civil services should
ensure the improvement of institutions in their respective countries to serve as a
conduit for enhancing domestic investment in the subregion.
