Do Sub-Saharan African Cities With Lower Labour Cost Attract Greater FDI Inflow?

Developing countries are expected to have a comparative advantage in labour intensive manufacturing activities, and thus attract significantly higher FDI inflows. This chapter investigates the extent to which labour costs affect FDI inflow to Sub-Saharan African cities. The use of city level rather than national FDI inflow reduces problems of omitted variable bias and allows for better econometric identification. Our analysis reveals that …