On the Determinants of Investment in Sub-Saharan African Manufacturing Firms

Abstract

Investment is a crucial factor determining economic performance at the firm as well as the country level. In this paper I identify the determinants of the decision to invest in new plant and equipment as well as the determinants of the level of such investment for a sample of firms in 19 sub-Saharan African countries. In particular, I concentrate on the role of property rights, external finance, trade status and firm ownership on investment. Results indicate that internationally trading firms, foreign owned firms and firms with better access to sources of external finance tend to be more likely to invest and to invest more, with little role for indicators of property rights in influencing investment decisions found.