Institutional structures and foreign direct investment inflows to oil producing countries: Evidence from Africa

Abstract

In recent times, there has been a decline of investment in oil producing countries worldwide (OPEC, 2017). Due to the fact that direct investment in oil production activities in most African countries is dominated by foreign entities, there are doubts as to the future of foreign direct investment in oil producing countries in Africa (Kurul & Yalta, 2017). Indeed a number of studies have examined the relationship between institutional structures and foreign direct investment but have not focused on the context of oil producing countries where direct investment in oil production activities is dominated by foreign firms. Thus by focusing on oil producing counties in Africa, this study examined the relationship between institutional structures and FDI. By employing the General method of moment estimation technique, the study found that institutional structures are relevant to attracting FDI to oil producing countries in Africa. This study recommends that oil producing economies should continue to institute economic policies that enhances or promote institutional quality.