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ABSTRACT
This study investigates the relationship between the six World Governance Indicators and foreign portfolio investment in 33 Sub-Saharan African (SSA) countries over the years of 1998–2015. GMM analysis finds that portfolio inflows are most significantly attracted by the ability of SSA governments to implement policies effectively, strengthening the quality of institutions, and controlling corruption; but are deterred by the regions poor record of the rule of law and political stability.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 The sample countries are listed in Appendix A1.
2 The unit root test results are summarised in Appendix B.
3 Missing observations have been interpolated using the linear spline interpolation method for the years of 1997, 1999, and 2001.
4 The revolving door phenomenon occurs when money flows both into and out of a country. During periods of capital flight money which does flow into the country tends to be repatriated shortly after investment.