Competitiveness of African Economies: A Case Study on How SMEs Can Analyze and Select African Countries for FDI

Abstract

This paper overviews a valuable method by which world-wide countries/markets can be analyzed and compared for their relative attractiveness in terms of foreign direct investment and international trade. The method is grounded in theory developed by Wood and Robertson (2000), and is aimed specifically at aiding small to medium sized enterprises (SME) who may find global markets daunting. A case study focusing on a U.S. based SME, an alternative energy company investigating Sub-Saharan African market options is presented. The paper allows readers to understand why knowledge of a countries’ political and legal environment, infrastructure, economic trajectory, cultural realities and market potential are critical for international business success. In particular, SME managers can glean from this work, the importance of viewing multiple dimensions of global business (again, politics, economic, infrastructure, culture, legal systems and market potential), in a theoretically sound framework. The case of Sub-Saharan markets will demonstrate how such knowledge can be utilized to systematically and objectively assess which market(s) are the most promising for any company wishing to market any product or service to any country in the world.

Keywords::

• African economies
• SMEs
• competitiveness