Impact of intellectual property rights on foreign direct investment in Africa

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The study investigated the impact of intellectual property rights on foreign direct investment (FDI) in selected African countries (Burkina Faso, Ivory Coast, Nigeria, Cameroon, Mali, Kenya, Burundi, Central African Republic, Rwanda, Senegal, Zimbabwe, and Tanzania). The purpose of the study is to develop property rights policies that encourages FDI in African countries. How FDI is influenced by the combination of trade openness and intellectual property rights was also examined using the same data set and econometric methods such as the dynamic generalized method of moments (GMM), fixed effects, and pooled ordinary least squares (OLS). Panel data ranging from 2005 to 2019 were used for the purposes of this study. A 1% increase in intellectual property rights led to a 22.73% increase in FDI inflows under the dynamic GMM and a 45.55% increase in FDI inflows under the random effects. These results show that intellectual property rights significantly enhanced FDI under the random effects and dynamic GMM. FDI was insignificantly enhanced by intellectual property rights under the pooled OLS and fixed effects methods. A 1% increase in complementarity between intellectual property rights and trade openness (complementarity term) pushed up FDI inflows by 17.78% under the dynamic GMM, whilst a 1% increase in the complementarity term increased FDI inflows by 16.72% under the fixed effects. In other words, dynamic GMM and fixed effects approaches show that the complementarity component significantly improved FDI inflows. The paper recommends implementing the best property rights strategies to improve FDI inflows into African countries.

Acknowledgment
The author appreciates the moral support from the University of South Africa, his employer.

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    • Table 1. Mean trends in FDI and intellectual property rights in chosen African nations (2005–2019)
    • Table 2. Panel stationarity tests – Individual intercept
    • Table 3. Kao’s (1999) co-integration results
    • Table 4. Results
    • Conceptualization
      Kunofiwa Tsaurai
    • Data curation
      Kunofiwa Tsaurai
    • Formal Analysis
      Kunofiwa Tsaurai
    • Investigation
      Kunofiwa Tsaurai
    • Methodology
      Kunofiwa Tsaurai
    • Project administration
      Kunofiwa Tsaurai
    • Resources
      Kunofiwa Tsaurai
    • Software
      Kunofiwa Tsaurai
    • Validation
      Kunofiwa Tsaurai
    • Writing – original draft
      Kunofiwa Tsaurai
    • Writing – review & editing
      Kunofiwa Tsaurai