Business environment constraints and foreign equity participation in Africa

Abstract

Using logit regression on firm-level survey data, this study examines the linkages between foreign equity participation and different aspects of the business environment for a selection of ten African countries. The findings suggest that factors relating to finance (access to finance) and institutions (access to land, customs and trade regulations, corruption and the judiciary) significantly lower the probability of foreign equity participation. The business environment constraints are also examined according to different firm characteristics, namely the degree of foreign ownership, the size of the firm and the industry in which the firm operates.