THE ATTRACTIVENESS OF FOREIGN DIRECT INVESTMENT

This paper assesses the effects of institutional factors on FDI in the Democratic Republic of Congo with a particular focus on the governance indicator. In the light of the results found we have drawn two major findings. Firstly the quality of institutions has a positive but not significant effect on FDI which is more than proportional as ceteris paribus an increase in the indicator of the quality of institutions by 1 point leads to an increase in net FDI inflows of more than 1%. Secondly in the long term compared to the short term the quality of institutions has a negative and significant effect on the net inflow of FDI. Thus all other things being equal an increase in the indicator of the quality of institutions by 1 point leads to a decrease in net FDI inflows of 35.72%. This result is consistent according to whether the quality of institutions in the DRC constitutes a brake on the attractiveness of FDI. This situation can be explained by the problems linked to the attractiveness of FDI in the DRC including corruption country risk political instability and internal conflicts.