Determinants of Foreign Direct Investment (FDI) In an Emerging Market Economy: The Case of South Sudan

The purpose of this study was to assess the determinants of Foreign Direct Investment (FDI) in South Sudan as an emerging market. The specific objectives of the study were to determine the impact of economic growth on inflows of Foreign Direct Investment (FDI) in South Sudan; to examine the effect of exchange rate valuations with the inflows of foreign direct investment in South Sudan, and to assess the impact of interest rate valuations in terms of the inflows of foreign direct investment in South Sudan. The study targeted a population of 150 foreign firms which was determined to a sample of 109 correspondents, particularly to senior managers in foreign firms. The study chosen purposive and cluster samplings for successful collection of data. Each foreign firm was issued one questionnaire to fill and was collected by the researchers. The collected data was analyzed using descriptive statistics with the help of SPSS. The statistical reliability of this study indicated that all combined variables have a Conbach Alpha of .656 which was evaluated as very good and has acceptable reliability level. The study obtained a response rate of 100%, thus it was valid and appropriate for analysis. The results indicate that economic growth has significant positive impact on FDI inflows in South Sudan; relative weaker exchange rate is expected to increase FDI inflows into South Sudan; and relative high interest rate is expected to increase FDI inflows into South Sudan. The study recommends that South Sudan government should strengthen economic, fiscal and monitory policies. The Bank of South Sudan should adopt fixed relative weak exchange rate and should keep interest rate relatively high.