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DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN CÔTE D’IVOIRE by YACOUBA TRAORE Student No: 203126182 Submitted in partial fulfilment of the requirements for the degree MASTER’S DEGREE IN BUSINESS ADMINISTRATION in the Business school Faculty of Management Sciences TSHWANE UNIVERSITY OF TECHNOLOGY Supervisor: Professor R. Rugimbana October 2011 ABSTRACT The extant literature shows that in this new world economy, which is driven by globalization, developing countries generally and African countries in particular have shown less competiveness in their ability to attract Foreign Direct Investment (hereinafter referred to as FDI). Whilst there is some literature on FDI determinants for developing countries, there is a far greater emphasis on Asian and European countries. The lack of sufficient scholarly investigation of FDI determinants in regards to developing countries in Africa provides an important rationale for focusing on this region. This study proposed to partially address this lacuna by assessing the case of one African country namely Côte D’Ivoire. Specifically, the purpose of the study was to identify the most critical factors that would enhance the capability of Côte D’Ivoire to attract FDI for its own development. In implementing the study, a positivism paradigm was utilised which involves the use of reductionist or quantitative methods. In the process, the study employs a descriptive design in order to better profile the most important FDI determinants in the case of Côte D’Ivoire. More specifically, a survey instrument that was developed by Tuselmann (1999) and adapted and validated by Coskun (2001) and later by Stoian and Filippaios, (2008) was used to attempt to identify the most important factors that influence FDI into Côte D’Ivoire. The questionnaire was submitted to some 80 senior government officials in Ministries and Government departments, which are involved in FDI activities such as International Trade, Commerce, Foreign relations, the Côte D’Ivoire Chamber of Commerce as well as International Business Development across Côte D’Ivoire. Of these 57 were successfully completed and utilized for data analysis purposes. The main findings were that factors such as (1) the promising performance of Côte D’Ivoire’s economy; (2) the growth of Côte D’Ivoire’s local market; (3) the geographical location of Côte D’Ivoire; (4) Côte D’Ivoire legal environment for ii investment and business and (5) investment incentives are the most important determinants for attracting FDI into Côte D’Ivoire. iii ABBREVIATIONS CI Côte D’Ivoire RCI The Republic of Côte D’Ivoire FDI Foreign Direct Investment NEPAD New Partnership for Africa’s Development ECOWAS Economic Community of West African States WTO World Trade Organization WAEMU West African Economic and Monetary Union TNCs Transnational Corporations MIGA Multilateral Investment Guarantee Agency iv DECLARATION I, Traore Yacouba, hereby declare that this dissertation submitted in partial fulfilment of the matters degree in business administration (MBA) at Tshwane University of Technology, is my own original work and has not been previously submitted to any other institution of higher education. I further declare that all sources cited or quoted are indicated and acknowledged by means of a comprehensive bibliography or list of references. Signed ……………………………………………………. Yacouba Traore Date: ………………………………………………………. v ACKNOWLEDGMENTS I would like to express my sincere gratitude and appreciation to my family and friends. In particular, my uncles and friends Boubakar Kone, Seka Obodji, Mbe Adou, Michel Gbagbo, Diabate Beh, Konate Aboubakar, and Seri Gervais. In the same breath, I want to express my sincere and heartfelt gratitude to my fiancée Nkosi Nomsa for her support, patience, and understanding throughout this project. For academic support, I also extend gratitude to my supervisor Prof. Robert Rugimbana for his guidance, assistance and support; the Dean of the Faculty Dr. Edgar Nesamvuni for his valuable assistance; Business School staff such as Richardson Shambare, Takesure Zhowa, Karen Chiutsi for their support; Nkosinathi Sithole for technical editing and my colleagues in my MBA group: Neo, Jacqui, Nyandee and Molefe. To all, I say merci beaucoup. vi TABLE OF CONTENTS ABSTRACT.................................................................................................................i ABBREVIATIONS.....................................................................................................iv DECLARATION......................................................................................................... v ACKNOWLEDGMENTS ......................................................................................... vi LIST OF TABLES ..................................................................................................... xi LIST OF FIGURES ................................................................................................. xiii CHAPTER 1 INTRODUCTION 1.1 Chapter Overview .......................................................................................... 1 1.2 Introduction and Background to the Study ......................................................... 1 1.3 Conceptual Parameters of the Study .............................................................. 1 1.4 Background to the Research Problem ............................................................ 4 1.4.1 Research Problem and Question ............................................................. 4 1.5 Methodology .................................................................................................. 5 1.6 Research Assumptions and Limitations ......................................................... 7 1.7 Research Scope and Delimitations ................................................................. 8 1.8 Definition of Terms ........................................................................................ 8 1.9 Structure of the Dissertation ........................................................................... 9 1.10 Conclusions .............................................................................................. 10 CHAPTER 2 OVERVIEW OF CÔTE D’IVOIRE 2.1 Introduction ....................................................................................................... 11 2.2 Brief presentation of Côte D’Ivoire .................................................................. 11 2.2.1 Geo-Political Environment ........................................................................ 12 2.2.2 Aftermath of the Political Crisis ................................................................ 13 2.3 Côte D’Ivoire Economy .................................................................................... 13 2.3.2 The period 2000 to 2009 ............................................................................ 14 2.4. Potential for Foreign Direct Investment........................................................... 16 2.5 Conclusion ........................................................................................................ 17 vii CHAPTER 3 LITERATURE REVIEW 3.1 Introduction ....................................................................................................... 18 3.2 The Notion of International Trade .................................................................... 18 3.3 Foreign Direct Investment ................................................................................ 25 3.3.1 Selected Conceptualisations of Foreign Direct Investment. ...................... 25 3.3.2 Types of Foreign Direct Investment. ......................................................... 26 3.3.3 Foreign Entry Modes ................................................................................. 27 3.3.4. Influencers of Foreign Direct Investment ................................................. 29 3.3.5 Challenges/Benefits of Foreign Direct Investment ................................. 32 3.4. Africa and Foreign Direct Investment ............................................................. 35 3.4.1 Share of Africa over the World Stock of Foreign Direct Investment ........ 35 3.4.2 Performance of Different Africa Regions for Foreign Direct Investment . 38 3.5 Côte D’Ivoire and Foreign Direct Investment ................................................ 40 3.5.1 Impact of Foreign Direct Investment on Côte D’Ivoire........................... 43 3.6 Research Problem and Question ....................................................................... 55 3.6.1 Research Problem ...................................................................................... 55 3.6.2 Research Question ..................................................................................... 56 3.7 Conclusion ........................................................................................................ 56 CHAPTER 4 RESEARCH METHODOLOGY 4.1 Introduction ....................................................................................................... 57 4.2 Research Approach/Paradigm ...................................................................... 57 4.3 Research Design ........................................................................................... 58 4.3.1 Research Methodology .................................................................................. 58 4.4 Research Methods ............................................................................................. 59 4.4.1 Population .................................................................................................. 59 4.4.2 Sampling Procedure ................................................................................... 60 4.4 Methods of Data Collection ......................................................................... 61 4.5 Validity and Reliability ................................................................................ 62 viii 4.6 Ethical Considerations ...................................................................................... 63 4.7 Data Analysis .................................................................................................... 64 4.8 Conclusion ........................................................................................................ 64 CHAPTER 5 ANALYSIS OF DATA OR RESULTS 5.1 Introduction ....................................................................................................... 65 5.2 Descriptive Statistical Analysis ........................................................................ 65 5.2.1 Frequency Distribution of the Respondents ............................................... 65 5.2.2 Institution Characteristics Distribution ...................................................... 72 5.2.3 Cross-Tabulation Distribution of Respondents and Institution Characteristics ............................................................................................ 72 5.2.4 Relative Percentage Frequency Distribution Per Variable ........................ 77 5.2.5 Cross-Tabulation (Characteristics of the Respondents and Variables)...... 79 5.3 Inferential Statistics .......................................................................................... 83 5.3.1 Reliability Test (Cronbach Alpha Test) ..................................................... 83 5.3.2 Chi-Square Tests ........................................................................................ 84 5.4 Correlation ........................................................................................................ 89 5.4.1 Correlation Matrix for Variables ............................................................... 89 5.5. Factor Analysis ................................................................................................ 90 5.5.1 KMO and Bartlett’s Test ............................................................................ 90 5.5.2 Principal Component Analysis .................................................................. 91 5.6 Conclusion .................................................................................................... 94 CHAPTER 6 FINDINGS AND CONCLUSIONS 6.1 Introduction ....................................................................................................... 95 6.2 Findings and Discussions .................................................................................. 95 6.2.1 Respondents and Institution Characteristics Findings and Discussions .... 95 6.2.2 Questionnaire Findings and Discussions ................................................... 96 6.2.3 Principal Component Findings and Discussion ....................................... 107 6.3 Conclusion about the Research Question and Objectives............................... 111 6.3.2 What are the main determinants of FDI attraction? ................................. 112 ix 6.3.3 What Determinants are applicable to Côte D’Ivoire in terms of establishing competitive advantage to attract FDI? ................................. 112 6.3.4 Which types of determinants are viewed as the most important by Investors? ................................................................................................. 113 6.3.5 How can Côte D’Ivoire reshape or reorient its current strategies in attracting FDI? ......................................................................................... 113 6.4 Theoretical Implications ................................................................................. 114 6.5 Managerial Implications ................................................................................. 115 6.6 Limitations and areas for further research ...................................................... 115 6.7 Recommendations ........................................................................................... 115 6.8 Conclusion ...................................................................................................... 116 7 References .............................................................................................................. 117 Appendix A: Information and Consent Sheet ........................................................... 129 Appendix B: Data Collection Questionnaire ............................................................ 131 Appendix C: Cross Tabulation Qualification and Variables .................................... 135 Appendix D: Cross Tabulation Position and Variables ............................................ 137 Appendix E: Cross Tabulation Type of Company and Variables ............................. 139 x LIST OF TABLES TABLE 2.1 Summary of the Côte D’Ivoire Balance of payments from 2000-2009 15 TABLE 2.2 Summary of the Côte D’Ivoire GDP from 2002-2010 15 TABLE 3.1 International trade theories adapted from Hill (2003;2009) 19 TABLE 3.2 Inward FDI stock for Africa, 2000-2007 36 TABLE 3.3 FDI inflow for different regions of Africa, 2000-2007 38 TABLE 3.4 Côte D’Ivoire, FDI record for declaration and approval schemes from 42 investment records (01-01-1996 to 17-03-2009) TABLE 3.5 GDP as per economic sector from 2002-2009 46 TABLE 3.6 Côte D’Ivoire’s total FDI as per different Economic activities, for the 47 period 1996-2008 TABLE 3.7 Employment generated by Côte D’Ivoire FDI inflow, 1996-2009 49 TABLE 4.1 Description of questionnaire Survey 61 TABLE 5.1 Respondents position’s distribution 66 TABLE 5.1 Respondents position’s distribution (cont’d) 66 TABLE 5.1a Summary of distribution of position held 67 TABLE 5.2 Qualification distribution of respondents 70 TABLE 5.2a Qualification distribution of grouped respondents 71 TABLE 5.3 Type of institution distribution 72 TABLE 5.4 Qualification and position cross tabulation distribution 73 TABLE 5.5 Qualification and type of institution cross tabulation distribution 75 TABLE 5.6 Position and type of institution cross tabulation distribution 76 TABLE 5.7 Frequency of responses for the questionnaire (Q1-Q16) 77 TABLE 5.8 Cross-tabulation for qualifications and variables (Q1 & Q2) 80 TABLE 5.9 Cross-tabulation of positions and variables (Q1, Q2 & Q7) 81 TABLE 5.10 Cross-tabulation for type of institution and variables (Q1 & Q2) 82 TABLE 5.11 Cronbach’s Alpha for the survey instrument 83 TABLE 5.12 Cronbach’s Alpha for each variable (Q1-Q16) 84 TABLE 5.13 Chi-Square tests for qualifications and positions 84 xi TABLE 5.14 Chi-Square tests for qualifications and type of institution 85 TABLE 5.15 Chi-Square tests for respondents’ positions and type of institution 85 TABLE 5.16 Chi-Square tests for positions and variables (Q1-Q16) 86 TABLE 5.17 Chi-Square tests for qualifications and variables (Q1-Q16) 87 TABLE 5.18 Chi-Square tests for type of company and variables (Q1-Q16) 88 TABLE 5.19 Correlation matrix for variables 89 TABLE 5.20 KMO and Bartlett’s Test 90 TABLE 5.21 Principal component analysis of variables 91 TABLE 5.22 Mean ratings for variables (Q1-Q16) 92 TABLE 5.23 Mean ratings for components or factors 93 TABLE 5.23a Summary of the mean ratings for factors 94 xii LIST OF FIGURES FIGURE 2.1 Geographical Situation of the Republic of Côte D’Ivoire 11 FIGURE 3.1 Share of Africa Inflow of FDI over the World Inflow of FDI 37 stock from table FIGURE 3.2 Share of FDI inflow for different African regions from table 3.4 39 FIGURE 3.3 Total GDP over the period 2002-2009 44 FIGURE 3.4 Performance as per economic sector, to the total GDP from table 3.5 46 FIGURE 3.5 Employment generated from FDI inflow for the period 1996-2009. 51 FIGURE 5.1 Detailed position distribution held by respondents 69 xiii CHAPTER 1 INTRODUCTION 1.1 Chapter Overview The aim of the introductory chapter is to provide an overview of the whole study. The background and motivation for this study are first provided. Next are the problem statement, research questions, aims and objectives, and the justification for this study. Finally, a summary of the research methods and design is provided, definitions presented, and delimitations expounded upon. 1.2 Introduction and Background to the Study Since attaining independence in 1960, Côte D’Ivoire (RCI) adopted a free market economy. Consistent with free market principles and as part of the country’s new economic policy that came into force in July 1995, among other initiatives, the Ivorian government encouraged Foreign Direct Investment (FDI) (New investment code, 1995). By and large, that new investment framework sought to promote and stimulate FDI by reducing bureaucracy and red tape as well as cutting the cost of investment in Cote D’Ivoire. The code specifically provided for exemptions on various taxes and customs duties. Above all, the legislation removed all limitations that imposed restrictions on foreign ownership of businesses (New investment code, 1995). As an investment destination, Cote D’Ivoire is endowed with minerals - oil reserves, gas, gold and diamonds as well as fertile agricultural land. The infrastructure in the country is also improving. The country is part of the Cotonou Agreement that continually negotiates the trade partnership agreement between the African, Caribbean and Pacific countries with the European Union. Côte D’Ivoire is also a member of the Multilateral Investment Guarantee Agency and the World Trade Organization (WTO) (U.S Bureau of African Affairs, State Report, 2009). 1 This research study has been motivated by the notion that useful investment in a foreign location will occur only if the latter offers certain location-specific advantages in terms of resources and facilities that make it possible for investors to explore their firm-specific ownership advantages (Dunning, 1981: 46). According to Dunning, Côte D’Ivoire offers vast potential opportunity for FDI inflow, due to its ideal location and modern infrastructure, both of which offer important access. In addition, the second main motivation is based on the Republic of Côte D’Ivoire’s political and geo-economic stance. 1.3 Conceptual Parameters of the Study The conceptual parameters adopted for this study are based on the idea of what Foreign Direct Investment entails. According to Hill (2007:5-10), globalization and international trade refer respectively to “the shift toward a more integrated and interdependent world economy and includes the globalization of markets and production and the export of goods or services by a firm to consumers in another country”. Alan (2001:4) describes globalization as “the activities of multinational enterprises engaged in FDI and the development of business networks to create value across national borders”. Hill (2007:10) has explained how globalization has favoured the decline in barriers to the free flow of goods, services and capital on the one hand and the technological change, particularly the dramatic developments in recent years in communication, information processing and transportation technologies on the other. Those two macro factors have impacted on FDI in many ways. The first impact observed is an increase in FDI flow worldwide from $25 billion in 1975 to a record $1.3 trillion in 2000. The shift of FDI from developed countries, such as the United States, to rapidly developing countries, including China, is also one of the issues addressed by Mottaleb (2007:6-8). That latter author demonstrates the above by comparing an uneven FDI inflow amongst developing countries, using per capita GNI as the 1 criterion for dividing countries into categories such as lower middle-income countries and low-income countries. In addition, he argues that: “the socio-economic development observed in certain developing countries associated with the move towards a transparent investment environment are all results of the impact of globalization and international trade on Foreign direct Investment”. The increase of the world’s production output and the change in the balance of trade which have seen the United States’ dominance drop from 40% in 1963 to 21% in 2004 is important (Hill, 2007:10). According to Hill (2007:10), Foreign Direct Investment occurs when a firm invests resources in business activities outside its home country. According to Jonathan and Diane (2004:87), Foreign Direct Investment means investing directly in production in an overseas market, usually by purchasing or buying a part-share in an existing business. Establishing a new business is called Greenfield Investment. The United States is one of the largest foreign direct investors and the majority of its activities take the form of mergers, as opposed to setting up of new subsidiaries. Asian countries, like China, Hong Kong and Singapore, are the greatest recipients of FDI after the United States. Africa, they add, has never been a major recipient of FDI flows and, as a result, it lags behind other regions of the world. According to Chantal and Patrick (2005:6), on an annual average basis Africa’s share of global FDI inflow was 1.8% for the period 1986-90 and 0.8% for the period 19992000, compared to other regions of the world for the same period. For instance, while the USA inflow was US$314 billion, the EU inflow was US$671 billion. They indicate a slight improvement in 2001, where inflow to Africa rose from US$9 billion to US$19 billion in 2001, increasing the region’s share of global FDI to 2.3%. They state the various versions of FDI, principal among which are: Horizontal Foreign Direct Investment (which is when a business invests in a similar form of industry to what it is involved in at home) and Vertical FDI (which is when the investment in an overseas industry either provides inputs into or sells outputs to the business’s domestic operations). 2 Finally, and according to Kok and Ersoy (2009), the following factors have characterized FDI over the past two decades or more: First, a rapid increase in the total volume of FDI. Second, a decline in the importance of the US as a source of FDI. Third, an increase in FDI into developing nations, which includes Eastern Europe and Asia. Fourth, the US becoming a recipient of FDI and fifth an increase in FDI in developing nations. 1.3.1 Influencers of FDI On the basis of the literature, the following factors have been suggested as being factors that influence FDI inflow. These are (i) the level of socio-economic development (ii) the endowment of natural resources, (iii) the functionality of market institutions and mechanisms, (iv) the character of the host-country economic policy, (v) the stability of the foreign-exchange market, (vi) the political stability, (vii) and the legal system and law enforcement as presented by Marios and Spyros (2007:493). Dunning (1993:56-62) had earlier argued that the influences of FDI are determined by a multinational enterprise’s strategic objectives. These objectives are the primary motives for FDI flow and are characterized by the following factors: (i) the resource seekers, (ii) the market seekers, (iii) the efficiency seekers, (iv) the strategic asset seekers, (v) and other motives for MNE activity. In addition, Mottaled (2007) provides the following as FDI influencers: “political risk, investment environment, infrastructure, regulatory framework, bureaucratic hurdles and red tape, judicial transparency, and the extent of corruption” in the host country. It can be seen that the influencers of FDI vary considerably; most are based on the angle of observation and some are based according to investors’ perceptions in terms of what critical determinants could affect their investments decisions. For example, political risk according to Mottaled will have greater importance for the African continent than the Asiatic continent. 3 Dunning (1981) suggests that transnational corporations (TNCs) will invest in a foreign location only if the latter offers certain location-specific advantages in terms of resources and facilities that make it possible for the TNCs to explore their firmspecific ownership advantages. Various authors suggest that location decisions are influenced by a number of factors. Tuselmann, (1999) divides these factors into two groups: Supply factors (such as labour costs, the skills level of the labour force, and corporate taxation) and demand factors (such as market size and growth, and geographical location). For the purposes of this study the survey instruments developed by Tuselmann (1999) and adapted and validated by Coskun (2001), and later by Stoian and Filippaios, (2008) are utilized to answer the present research question. 1.4 Background to the Research Problem As discussed earlier, many African countries, including Cote D’Ivoire, find it difficult to attract FDI flows and, as a result, lag behind other regions of the world. 1.4.1 Research Problem and Question 1.4.1.1 Research Problem The research problem that arises from the above discussion is primarily about trying to resolve the poor levels of FDI into an African country such as Côte D’Ivoire. Specifically, it’s about the identification of the most useful mechanism that could be applied by Côte D’Ivoire’s investment and promotion center (CEPICI). The novelty of this study is that it focuses on the appropriate framework for attracting FDI to Côte D’Ivoire thus establishing such a framework for investment purposes. 4 1.4.1.2 Research Question Following on from this problem, the research question posed for this study is as follows: What are the most critical determinants that should be addressed or established by Côte D’Ivoire to make the country more competitive in attracting foreign direct investment? The research aims for this study are: To assist the Côte D’Ivoire government authorities to become more aware of the competitive determinants for Foreign Direct Investment. To assist the Côte D’Ivoire FDI policy framework developers by identifying the most important determinants for establishing a viable Foreign Direct Investment (FDI) infrastructure in Côte D’Ivoire. The ensuing Investigative Questions are: What are the main determinants of Foreign Direct Investment attraction? What determinants are applicable to Côte D’Ivoire in terms of establishing a competitive advantage to attract Foreign Direct Investment? Which determinants are viewed as the most important by investors? How can Côte D’Ivoire shape or reorient its current strategies in attracting Foreign Direct Investment? 1.5 Methodology 1.5.1 Study design For the purposes of this study a descriptive research design is utilized. The aim of this type of design and research process is to describe the characteristics of a phenomenon (Collis & Hussey, 2009:334). The research is conducted with the view to understanding and possibly providing the Ivorian official policy makers with the most important determinants to be considered for the establishment of a viable FDI infrastructure. 5 1.5.2 Survey Instrument Development In developing the instrument for collecting data, a modified version of the original Tuselmann (1999) instrument will be utilised. This instrument has been subject to reliability and validity tests in numerous studies including Coskun (2001) and later by Stoian and Filippaios (2008). For the purpose of this study, the instrument will comprise of a total of 16 items measured on a 4 point Likert scale with the following items:- 1) not important, 2) of little importance, 3) important, and very important. 1.5.3 Population, Sample Selection Criteria, and Data Collection In this study the population of interest included all developing countries involved in receiving direct foreign trade in Africa. For the purposes of this study, Côte D’Ivoire was sampled purposively (conveniently) because as a country it bears important trade characteristics to other developing countries particularly those in Africa. The sample units of interest were found 1) in the Côte, D’Ivoire Promotion and Investment Center’s (CEPICI) repertory agenda for all foreign companies operating within Côte D’Ivoire, 2) the department of mining, and 3) one of Côte D’Ivoire’s telecommunication agency’s (ATCI) updated companies’ data list from which eighty (80) foreign companies were conveniently selected from a total of 400. The sample elements of this study included senior government officials and CEO’s of International Businesses operating in Côte D’Ivoire. The senior government officials participating in the study were selected from ministries and government departments involved with making policies on international trade, commerce, foreign relations, and the Côte D’Ivoire Chamber of Commerce. A total of thirty (30) sample elements were selected. International Businesses chosen for the study were those that comprised of companies that have operated in Côte D’Ivoire for more than ten years. On the basis of this process, the selection criteria, first, involved each relevant department being sampled with regards to its role in Côte D’Ivoire’s foreign trade 6 policy and, second, the key decision makers were identified. Twenty (20) of these were selected on a judgemental basis from a sample frame of thirty (30). The overall sampling method applied was purposive (judgemental), which is a nonprobability sampling method. The study was conducted over a period of four (4) months, from the beginning of January 2010 to the end of April 2010. A total of one hundred (100) questionnaires was prepared and mailed out. Eighty (80) questionnaires were received back, but among these twenty three (23) were not fully completed. A total of fifty seven (57) responses were received, representing a 57% response rate. This rate of response is in keeping with studies in similar areas (Coskun, 2001; Stoian & Filipaios, 2008). In an attempt to identify views for the most important factors that influence FDI attraction to Côte D’Ivoire, a questionnaire, which was based on a survey developed by Tuselmann (1999) and adapted and validated by Coskun (2001) and later by Stoian and Filippaios, (2008) was applied. The data collected was analyzed using SPSS version 17, whereby descriptive and inferential statistical tests were performed. A more detailed discussion of the methodology is provided in Chapter 4. 1.6 Research Assumptions and Limitations For the purposes of this research study the following assumptions were made: Foreign Direct Investment inflow to Côte D’Ivoire is determined by the availability of raw material, economic and social infrastructures, location specific advantages. Côte D’Ivoire’s economic stand of ECOWAS is the determinant of Foreign Direct Investment inflow. Côte D’Ivoire new code of investment favours Foreign Direct Investment Côte D’Ivoire infrastructures motivate Foreign Direct Investment inflow. 7 Hussy and Hussey (1997:349) define “limitation” as any potential weakness in the research. In this study limitations include: The companies, government officials and representations sampled (Unit of study) are those established and operating in Côte D’Ivoire. The findings from a one country perspective may not be generalized to other countries. The size, financial muscle and years of operations of the companies sampled were not taken into account. 1.7 Research Scope and Delimitations According to Hussey and Hussey (1997:129), delimitations explain how the scope of the study was focused on only one particular area or entity, as opposed to say a wider or more holistic approach. The Scope and delimitation for this study essentially lie in the fact that it involved one country and the sample was restricted to Ivorian senior government officials and selected International Businesses operating in Côte D’Ivoire to provide information on FDI influencers. Therefore findings should be used cautiously as they may not be generalized to other countries. 1.8 Definition of Terms Culture: according to Schermerhorn (2002:128), culture refers to a shared set of beliefs, values, and patterns of behaviour common to a group of people. Infrastructure: The adequacy of resources and systems to meet the basic needs of business. (Botha, 2006:164). Gross Domestic Product: as referred to GDP- it measures the output of goods that a country produces within its borders and items produced with foreign resources (Dlabay and Scott, 2006:46). 8 Economies of Scale: Refer to the reductions in unit cost achieved by producing a large volume of a product. Attaining economies of scale lowers a firm’s unit costs and increases its profitability (Charles, 2009:430). Profitability: For Charles (2009:420), it is the rate of return that the firm makes on its invested capital (ROIC), which is calculated by dividing the net profits of the firm by total invested capital. Raw Material: Koepke (1796) defined raw material as, crude or processed material that can be converted by manufacture, processing, or combination into a new and useful product. Host-Country Nationals: According to John and Praveen (2005:380), host-country nationals are local workers who come from the host (receiving) country where the unit (plant, sales unit) is located. Home-Country Nationals: This refers to expatriate employees who come from the parent firm’s home (source) country (John and Praveen, 2005:380). Ethics: The term ethics refers to rules and principles that define what is considered to be right and wrong conduct. (Robbins & Coulter, 2005:110). 1.9 Structure of the Dissertation This dissertation contains six chapters and these will be structured as follows: Chapter 1: Scope of the study This chapter described the scope of the study, the background of the research, the research question, objectives, and sub-questions are explained. The research methodology is also described. 9 Chapter 2: Brief presentation of Côte D’Ivoire This chapter will describe the Côte D’Ivoire’s specific setting - its infrastructures and economy Chapter 3: Literature Review This chapter initially presents the literature on Foreign Direct Investment, International trade and the relationship between them. Secondarily, the chapter presents the literature on Côte D’Ivoire, Africa and Foreign Direct Investment. Chapter 4: Research Methodology This chapter describes the research methodologies used such as sampling, methods of data collection, validity and reliability, ethical consideration and data analysis procedures. Chapter 5: Analysis of Data Chapter five provides a discussion on the actual results of the empirical study and the testing of the hypotheses presented for the study. Chapter 6: Findings, discussion, conclusion and recommendations This chapter will present and discuss the findings of the study. The conclusion and recommendations of this research study will be made based on the findings. 1.10 Conclusions In this first chapter, an overview of the study was presented. In the process an abbreviated literature review on FDI and globalization was discussed followed by an outline of the Research Process. The latter included the purpose of the study, the research problem and research question, as well as investigative questions. In addition, the assumptions made as well limitations and delimitations were also presented. Chapter 2 provides an overview of the economic characteristics of Côte D’Ivoire. 10 CHAPTER 2 OVERVIEW OF CÔTE D’IVOIRE 2.1 Introduction This chapter provides a brief overview of Côte D’Ivoire, in terms of the Geo-Political and Economic aspects that may have implications for Foreign Direct Investment. 2.2 Brief presentation of Côte D’Ivoire The Republic of Côte D’Ivoire(here-in after referred to as the RCI) is a country in West Africa which shares borders with Ghana to the East, Burkina Faso and Mali to the North, Liberia and Guinea Conakry to the west. Figure 2.1 Geographical Situation of The Republic of Cote d’ivoire Source (Worldatlas.Com) The Atlantic Ocean, with a coastline spanning about 550 km, forms its Southern border. According to the latest census (2009), the population of RCI is approximately 20 million (RCI Department of Statistics, State Report: 2009). With a total surface area of 322 463 square kilometres, the population density is about 62 persons per 11 square kilometre. On average the population grows annually by an estimated 3.3 percent (RCI Department of Statistics, State Report: 2009). The average temperature is 27˚C and the average rainfall per annum is 1400mm. The geographical stance of the country with its harbour (which, after the harbour in Durban, is the second largest in Africa) offers opportunities for countries like Mali and Burkina Faso to use it as their import/export base (RCI Department of Statistics, State Report: 2009). 2.2.1 Geo-Political Environment The Republic of Côte D’Ivoire (herein after referred to as RCI) is a former French colony that attained independence in 1960 and, as in many francophone countries, the African Financial Community Currency (herein after referred to as FCFA and 1€ euro=655,957 CFA F fixed parity) is the official currency and French is the official language. As in South Africa, the RCI has a dual capital city system, a political capital Yamoussoukro and an economic capital, Abidjan. The main export products are; coffee, cocoa, timber, rubber, cotton, palm oil, oil products, and several other manufactured products. The main imports include; machinery, manufactured products, wheat, and rice. Its main trade partners are; France, Nigeria, USA, Germany, Italy, Netherlands, and the West Africa Economic and Monetary Union (WAEMU) (RCI Department of Economy, State Report: 2006). Côte D’Ivoire plays an important role in the economic activity of the West African Economic and Monetary Union (WAEMU), where it accounts for a 40% share of this Union’s reserves (Ken, 2010). Pierre (2009:4-5) pointed out that 13% of Africa’s GDP is derived from the ECOWAS countries. Nigeria and Côte D’Ivoire, the two largest economies of the ECOWAS region together account for 62.7% of that region’s total GDP, the relative share being respectively 47.4% and 15.3%. 12 2.2.2 Aftermath of the Political Crisis Since 19th September 2002, the country has faced a political crisis with France. The then president, S. E. M. Laurent Gbagbo worked towards bringing about stability in the face of that situation through the signing of a new accord. The previous accord of Ouagadougou (PAO) had delivered some improvements, and was signed in 2007. Since then of course there have been important changes in the Government following recent changes that saw President Gbagbo ousted and a new government sworn in, in 2011. 2.3 Côte D’Ivoire Economy As mentioned earlier, since its attainment of independence in 1960 the country adopted a free market economy stance. The GDP growth rate, per capita income, inflation rate, unemployment rate and schooling rate respectively were 1%, US$ 854, 1.4%, 13.1%, 72% (RCI Department of Statistics, State Report, (2004). In the following sections the thesis presents developments in the RCI economy. These developments are discussed over two time periods, 1) the period 1960 to 2000 and 2) the period 2000 to 2009. 2.3.1 The Period 1960 to 2000 Since the colonial period, RCI’s economy has been based on the production and export of Agricultural products. Furthermore, since 1960 up to mid-1980 the state of RCI enjoyed 25 years of sustained economic growth, with per capita GNP growing to a high of US$ 1,200 in 1999 as opposed to the average of US$ 400 among the surrounding countries (RCI Department of Economy, state report: 2000). Between 60% and 70% of the Ivorian people are engaged in some form of agricultural activity. Agriculture, forestry (which reduced from 20 million hectare in 1960 to less than 3 million hectare today), and fisheries account for more than one-third of GDP and two-thirds of exports. Côte D’Ivoire produces 40% of the world’s cocoa crop and is a 13 major exporter of bananas and coffee. The economy performed less than expected in the 1980s and until the early 1990s. However, in the same period, mining activities were very active. Various exploration works undertaken resulted in the discovery of numerous mineral deposits (gold, iron, copper, nickel, manganese, bauxite) and of industrial materials (dimension stones, clay for bricks and sand for glass). Petroleum reserves are estimated at 18, 680 million barrels, while gas reserves are over 21 billion cubic feet, raising hope for the future of the RCI economy (U.S Bureau of African Affairs, State Report: 2009). Côte D’Ivoire is among the world's largest producers and exporters of coffee, cocoa beans, and palm oil. Consequently, for those products the economy is highly sensitive to both fluctuations in international prices and to changes in weather conditions (U.S Bureau of African Affairs, State Report: 2009). Despite attempts by the Ivorian government to diversify the economy through the extraction of oil and gas, it is still heavily dependent on agriculture and related activities (U.S Bureau of African Affairs, State Report, 2009) GDP per capita was US$ 727 in 1996 but by 2003 had fallen to US$ 669. The 1994 devaluation of the African Financial Community Currency (herein-after as referred as to FCFA) and accompanying structural adjustment measures increased the international competitiveness of the agricultural, light industrial, and service sectors. However, reliance on raw cocoa and coffee exports, which account for 40% of the total exports, subjects the economy to the effects of the ups and downs of international price swings. In its effort to reduce that effect, the government encourages export diversification and intermediate processing of cocoa beans (U.S Bureau of African Affairs, State Report, 2009). 2.3.2 The period 2000 to 2009 From 2000 when the socialist party, Ivorian Popular Front (FPI), took the reigns of government, it inherited a difficult economic situation characterised by a dysfunctional politic climate. Consequently, all foreign assistance was cut off. The preceding government of President Gbagbo is working at engendering warm relations 14 with international financial institutions. For example, in 2001 the government signed a staff monitoring programme with the International Monetary Fund (IMF). But plans for poverty reduction and growth were disrupted by the onset of a new crisis in September 2002 (U.S Bureau of African Affairs, State Report: 2009). By mid-2002 the signs of economic and business recovery were encouraging but the political and social crisis that began in September 2002 undermined all efforts to resume cooperation with international donors. However, since 1999 successive waves of political crises have resulted in a drop in the GNP from US$ 1,200 in 1999 to US$ 382 in 2006 (U.S Bureau of African Affairs, State Report: 2009). Table 2.1 Summary of the Côte D’Ivoire Balance of payments from 2000 to 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (E) Current -171.6 -44.1 535.2 171.2 127.2 20.9 250.4 -66.6 201.9 791.2 account (billion of FCFA) (Source: Adapted from: Côte D’Ivoire, Department of Economy, State Report: 2009) The fluctuations in the balance of payments were due to political instability. Also the GDP increased from -1, 6% in 2002 to 3% and 8% in 2009 and in the first quarter of 2010, with an expected 3%. Table 2.2 Summary of Côte D’Ivoire GDP in annual percentage from 2002 to 2010 March 2010 2,002 2,003 2,004 2,005 2,006 2,007 2,008 2,009 2,010 Total GDP % -1.6 -1.7 1.6 1.8 0.7 1.6 2.3 3.8 3.0 (Source: RCI Department of Economy, State Report: 2009) According to Botha (2006:109), a deficit on the current account of the balance of payment is not necessarily a negative economic phenomenon, much in the same way as a bank overdraft is not necessarily a negative business phenomenon. In fact, a surplus on the balance of payments may constitute a problem for a developing 15 country that has employment and output growth as key objectives of Macroeconomic policy. Under such circumstances, the reason is simply that a surplus could be an indication of low growth (as reflected in low imports), and could also lead to a strengthening of the domestic currency (which is good for price stability but erodes export earnings). Related to Botha’s analyses, Côte D’Ivoire’s balance of payments deficit cannot be interpreted as a negative economic phenomenon; it only shows that the current import of goods and services exceed the export of goods and services in the country’s current account. The negative GDP rate in 2002 and 2003 appears to have been a direct result of the political crisis of 2002. During that period most French owned companies and their citizens were recalled by the French government. As a result some of those companies were relocated to other countries in the region. However, after 2003, they started to find their way back to Côte D’Ivoire. 2.4. Potential for Foreign Direct Investment The RCI offers enormous potential for FDI. The Government of Côte D’Ivoire encourages Foreign Direct Investment, as part of that country’s new investment code which was adopted by its National Assembly on July 1995 (New Investment Code, 1995). That new policy seeks to promote and stimulate FDI through bureaucracy elimination, reduction of cost of investment and the establishment of efficient official procedures. It provides exemptions from tax and customs duties and guarantees to the investor. There are no significant limits on foreign investment in terms of levels of foreign ownership or sector of investment (New Investment Code, 1995). The new code introduced two incentive schemes: (a) The declaration scheme, which enables any investment regardless of the cost to be eligible, within a maximum of 48 hours and in almost an automatic manner, to the benefits contained in the code on the basis of a simple declaration of the investor testified by the Investment Promotion Centre in 16 Côte D’Ivoire (Cepici). This scheme is applicable to all sectors of activities other than transport, trade, construction and public works, and finances. It only covers the investments relating to the starting of new activities, (New Investment Code, 1995). (b) The approval scheme covers investments where costs are over 500 million FCFAs. It also concerns all sectors of activities excluding finances, construction and public works. It takes into account all investments, regardless of their nature and in setting up or development of activity (New Investment Code, 1995). To illustrate, certain economic activity sectors such as the telecommunications and food processing industry accounted for 942,887,896,036 CFA and 468,328,871,251 CFA of total FDI inflows respectively during the period 1996-2008 (RCI Investment and promotion Center, State Report: 2009). More detail is provided in the next chapter. 2.5 Conclusion This chapter presented a general overview of Côte D’Ivoire and highlighted its economic performance from 1960 to the present. The Chapter sets the scene for understanding the extent to which the environment for business in Côte D’Ivoire is conducive for FDI. In Chapter 3 the appropriate and relevant literature on FDI is reviewed. 17 CHAPTER 3 LITERATURE REVIEW 3.1 Introduction Chapter three (3) presents a review of the literature that is currently available to the author on the subject of Foreign Direct Investment (FDI). The review starts with an interrogation of the relationship between International Trade and Foreign Direct Investment, it then, assesses the impacts of international trade on FDIs, its various forms, most important influencers, and typical advantages and challenges. Finally, for the purpose of this study, an FDI conceptual framework is then presented. 3.2 The Notion of International Trade According to Hill, (2003:8) International trade occurs when a firm exports goods or services to consumers in another country. This latter author emphasises that, many of the barriers to international trade prior to World War II mainly involved exorbitant import tariffs on manufactured goods. In this regard the aim was typically to protect domestic industries. As mentioned in the previous chapter, the Republic of Côte D’Ivoire (herein-after referred to as RCI) has been involved in the International trade. Its main export products are; coffee, cocoa, timber, rubber, cotton, palm oil, oil products, and several other manufactured products. Its main imports include; machinery, manufactured products, wheat, and rice. Its main trade partners are; France, Nigeria, USA, Germany, Italy, Netherlands, and the West Africa Economic and Monetary Union (WAEMU) as shown in the (Republic of Côte D’Ivoire Department of Economy, State Report: 2006). 3.2.1 International Trade Theories Several different theories and attendant models have been proposed for the purposes of predicting patterns of trade. The following as presented in table 3.1 represent some of the more prominent. 18 Table 3.1 International trade theories Mercantilism Adam Smith Ricardo’s Theory Theory Theory of of Comparative Absolute Advantage Advantage The main tenet of According to Hill, Ricardo showed in his book According to Hill, mercantilism (2009:171) Smith called Principles of political (2003:152) is Heckscher-Ohin Theory that, it is in a emphasizes that: a economy (1817) that it is Eli Heckscher (in 1919) and country’s best country should beneficial for a country to Bertil Ohlin (in 1933) predicted interests to specialize specialize in the production that countries should export maintain a trade production of goods of it goods that make intensive use surplus, to for which they have produces most efficiently and of factors that are locally export more an absolute to buy the goods that it abundant than advantage and produces less efficiently from (cheaper), while then trade these for others countries, even if this importing goods that goods means buying goods from make intensive use of produced by other countries that it could factors that are locally other countries. produce scarce (expensive) (Hill, it imports, 2009:168- 171) in the those goods that more efficiently itself (Hill, 2003:145) Leontief Paradox Raymond Vernon New Trade Theory Product Life Cycle Theory-Cycle Theory In 1953, Leontief, on the publication of his According to Hill, (2009:183- Emerging in the 1970s when study, raised questions about the validity of 184), proposed in the mid- economist ‘s studies pointed Heckscher-Ohlin theory. He then postulated 1960s, Vernon’s product life- out a firm’s ability to attain that the United States should be an exporter cycle theory is based on new economies of capital intensive goods and importer of product might labor intensive goods since the U.S has production abundance in capital and less in labor product will start in home international trade. Economies compared to other nations, which he found country where it has been of scale that wasn’t always true, thereafter known as developed are Leontief paradox (Hill, 2003:152-153). shifted to countries. At stages. Thus of the then the new will be developed the mature phase, the production will then moved to developing countries due to cost savings. (Source; Hill 2003; 2009) 19 of scale have which important implications for unit cost reductions associated with a large scale of output (Hill,2009:186). Since the colonial period, the Republic of Côte D’Ivoire’s economy has been based on the production and export of Agricultural products. As mentioned earlier, since its attainment of independence in 1960 the country adopted a free market economy stance as espoused by Adam Smith’s theory of Absolute Advantage, specifically, by specialising in the production of agricultural products such as cocoa, coffee, timber, rubber, cotton, palm oil, due the country’s climate absolute advantage for those agricultural activities. 3.2.2 International Trade and Foreign Direct Investment Recep and Bernur (2009) point out that, trade has traditionally been the principal mechanism by which economies are linked in order to create an “international economy”. However the latter authors also point out that FDI is also capable of linking national economies. It follows therefore that Trade and FDI as Economic mechanisms do reinforce one another. The trade effects of FDI depend on the following; 1) whether it is undertaken to gain access to natural resources, or consumer markets or 3) whether the FDI is aimed at exploiting local comparative advantage or 4) whether other strategic assets such as research and development capabilities exist. The World Trade Organisation (WTO) (1996:7-8) report makes the point that member countries agree in regards to their assessment of the positive contributions of FDI towards Economic Development and growth in Trade. Many developing countries recognize the positive contributions of FDI in terms of its growing importance within host economies and as a vehicle for the transfer of tangible assets. These observations add force to the argument that a consensus is emerging in regards to the complementary relationship between Trade and FDI. Fontagne (1999:10) points out that, the expansion of FDI directly affects the control and characteristics of economic activities. In fact, and according to the latter author, international production is to a large extent becoming internal to transnational corporations (TNCs). Fontagne (1999:10) also adds, that the potential effects of FDI on national 20 economies has both financial and productivity implications. Whereas, the impact of financial flows on trade is rather indirect, the impact on productivity is of a more direct nature. Despite the observations made above in regards to the possible relationship between Trade and FDI, the debate on the relationship between these two economic mechanisms has been quite unequivocal. Whereas, Bayoumi and Lipworth (1997), Ma et al., (2000), and Helpman et al., (2003) found that a substitute relationship exists between the two, in contrast, Brainard (1997) and Clausing (2000) found evidence of a complementary relationship existing between FDI and international trade. Adding to this divergence of opinions, Head and Ries (2001) and Swenson (2004) found substantial evidence for the presence of both substitute and complementary relationships between FDI and International Trade. The latter view finds support from writers such as Zarotiadis (2005:2) who argue that “the world pattern of FDI is remarkably similar to the world trade pattern. Yet the mainstay theory of FDI posits FDI as an explicit alternative to trade.” 3.2.3 The Impact of International Trade and Globalisation on Economic Growth Questions about the relationship between International Trade and economic growth have assumed a great deal of importance, particularly with the introduction of trade liberalization policies in many developing nations. However, important differences of opinion also exist when it comes to assessing the kinds of impact that International trade has on Economic growth. On one hand are those who view globalization and international trade as having a positive impact on the economy of developing countries. On the other hand, are those who believe that globalisation and international trade have a negative effect on developing countries (Economy watch, 2009: Online). 21 3.2.3.1 The Positive Perspectives View The literature suggests that the positive effects of international trade on economic growth were first pointed out by Adam Smith in 1776. Those ideas prevailed until World War II. However from the 1960s many studies which were based on the neoclassical theories of economic growth and International trade argued that International trade was in fact economic growth’s main driving force (Oscar, 2001:3). Accordingly, Economy Watch (2009: Online), proposes that economists who support globalization and International trade, have a brighter view of International trade and its impact on the Economic growth of developing nations. According to them, developing countries which have followed trade liberalization policies have experienced all the favourable effects of globalization and International trade. In this case they regard China and India as the trend-setters. There is no denying that International trade is beneficial for the countries involved in such trade, if it is practiced properly. International trade opens up the opportunities of the global market to the entrepreneurs of the developing nations. International trade also makes the latest technology readily available to the businesses operating in those countries. It results in increased competition both on the domestic and global fronts. They add that domestic entrepreneurs need to work more efficiently and ensure efficient utilization of available resources in order to compete with their global counterparts, on the one hand, and countries that allow for open trade policies will benefit from opportunities that are available from being involved in International trade. Since 1995, the Republic of Côte D’Ivoire has introduced a new code of investment that bears two incentives schemes. The amount of inflowing FDI has risen from 1,152,651,559 billion FCFA in 1995 to 4,145,352,597 billion FCFA in 2002. This positive variation of the inflow FDI during that period has impacted positively on the country’s GDP and moved it from a negative of 1.6 in 2002 to a positive of 1.8 in 2005. Dunning (1994:8-11) argues that, “inter-country competition to attract share FDI is becoming increasingly intense, as host country governments seek to exploit to the full the potential advantages of increased linkages with the globalizing economy of the 22 late 1990s. Consequently, an increasing number of governments have adopted a welcoming stance towards FDI, and are increasingly viewing it as a means of improving the competitiveness of their indigenous resources and capabilities. These governments also appear to be reviewing and reshaping their Economic strategies in order to attract FDI, In the process they are abandoning many restrictions on FDI inflows and introducing more sound Macroeconomic policies, such as the privatization of state-owned industries, deregulation, liberalization as well as antimonopoly policies as a means to this end”. In order to become more competitive in FDI attractiveness, the Republic of Côte D’Ivoire through its National Assembly, adopted a new investment code in July 1995 (New Investment Code, 1995). That new policy seeks to promote and stimulate FDI through the elimination of bureaucracy, reduction of cost of investment and the establishment of efficient official procedures. It provides exemption from tax and customs duties and guarantees for investors. There are no significant limits on foreign investment in terms of levels of foreign ownership or sector of investment in the New Investment Code (1995). The new code introduced two incentive schemes: (c) The declaration scheme, which enables any investment regardless of the level of the investment to be eligible, to the benefits contained in the code on the basis of a simple declaration of the investor testified by the Investment Promotion Centre in Côte D’Ivoire (CEPICI), within a maximum of 48 hours and in almost an automatic manner. This scheme is applicable to all sectors of activities other than transport, trade, construction and public works, and finances. However, it only covers the investments relating to the starting of new activities. (d) The approval scheme on the other hand covers investments where costs are over 500 million FCFAs. It also covers all sectors of activities excluding finances, construction and public works. It takes into account all investments, regardless of their nature (setting up or development of activity. 23 Dunning adds that by the same token, “direct intervention in markets has also been reduced, leading to the removal of subsidies, tariffs and non-tariff barriers to trade and control prices. Legal, financial and commercial infrastructures have also been reformed and modernized”. He then advises that, “countries” may be more successful in attracting FDI than others, due to “historical” and “geographical” circumstances. Their ability to attract FDI, together with the types of FDI attracted and the net Economic benefits which flow from it, can be expected to vary according to national political, Economic and legal cultures, traditions and infrastructures, together with the Economic objectives and policies pursued by host governments”. Romer (1986) and Lucas (1988) in their findings support the view that International trade plays a decisive role in countries’ rate of Economic growth. Similarly, Oscar (2001:3) states that; “as a result of this finding, many countries have reduced commercial barriers and other controls on Economic activity and obtained a significant (and lasting) increase in the rate on Economic growth”. This suggests that extroversion has a dynamic effect on the economy, helping to speed up the rate of Economic growth. 3.2.3.2. The Negatives perspectives According to Economy Watch (2009: Online), there is another group of economists who view International trade as an unfavourable change in a developing countries’ economy. According to these scholars, the gains from trade have gone mostly to the developed nations of the world. Liberalization of trade policies, reduction of tariffs and globalization have adversely affected the industrial setups of the less developed and developing economies. It’s argued that as a consequence of liberalization, the majority of infant industries in these nations have closed their operations. Many other industries that used to operate under government protection have found it very difficult to compete with their global counterparts. However, they concluded, that, even if the positive impacts of International trade are taken into consideration, it is important to note that International trade alone cannot bring about Economic growth and prosperity in any country. 24 To these Economists, other factors, such as flexible trade policies, favourable Macroeconomic scenarios and political stability, need to be present to complement the gains from trade. One example that is used and which is critical for this study is the Economic stagnation in the then Ivory Coast (now known as the Republic of Cote D’Ivoire) during the periods of 1980s and 1990s. According to this group of economists, the stagnation was mainly due to the absence of commensurate Macroeconomic stability which, in turn, prevented the positive effects of International trade from trickling down to the different layers of the then Ivory Coast society. The main argument here is about how International trade can lead to Economic growth, provided the policy measures and Economic infrastructure is accommodative enough to cope with the resulting changes in the social and financial scenarios. 3.3 Foreign Direct Investment 3.3.1 Selected Conceptualisations of Foreign Direct Investment. Several definitions or conceptualisations of FDI have been presented at different times and in differing contexts by writers. The following represent some of the more prominent conceptualisations and classifications. One prominent conceptualisation of Foreign Direct Investment (FDI) focuses on corporate activities, such as building plants or subsidiaries in foreign countries and buying controlling stakes or shares in foreign companies. It doesn’t include short term capital flows, such as the portfolio investments of “emerging market” mutual funds (Robert and Randolph, 2002). A second conceptualisation and as espoused by Anthony and Kwame, (2008), refers to FDI as an investment that involves a long-term relationship between a foreign investor or parent enterprise and an affiliate enterprise or foreign affiliate. A third set of conceptualisations and as presented by Hill (2007:10), refers to the purchase of land, equipment or buildings, or the construction of new equipment or buildings by a 25 foreign company as representing FDI. They argue that FDI occurs when a firm invests resources in business activities outside its home country. All these conceptualisations point out the fact FDI is any investment, except short term capital, made by parent companies or investors in foreign countries. It’s important to note that this investment can also be achieved through share acquisition or through starting up a new company. Hill (2007), in his definitions, sees the purchase of land, equipment or buildings as an investment; while Anthony and Kwame (2008) stress a long term of the investment which builds a relationship between an investor and it foreign affiliate. In summary, and in the light of the above definitions, it appears that FDI tends to occur when a firm invests resources (buying land, issuing of shares, construction of buildings, or buying of equipment, all of which involve long term relationships) into business activities outside its home country. This in fact represents the features of FDI as applies to Côte D’Ivoire currently. 3.3.2 Types of Foreign Direct Investment. The following are some of the types of Foreign Direct Investment that have been found to exist: 3.3.2.1 Inward FDI According to Hill (2003:685), inward FDI refers to flow of foreign direct investment into a country. 3.3.2.2 Outward FDI This form of Foreign Direct Investment is subject to tax incentives as well as disincentives of various forms. Risk coverage provided to the domestic industries and subsidies granted to the local firms stand in the way of outward FDI, which are also known as “direct investments abroad” (Economy Watch, 2009: Online). 26 3.3.2.3 Horizontal FDI According to Hill (2005:241), Horizontal Foreign Direct Investment occurs when a business invests in a similar form of industry to what it is involved in at home. 3.3.2.4 Vertical FDI Vertical Foreign Direct Investment takes place when a multinational corporation owns some shares of a foreign enterprise, which supplies input for it or uses the output produced by the MNC (Economy Watch, 2009: Online). All the FDI types mentioned above have been practiced in the Republic of Côte D’Ivoire, since the introduction of a new investment code which has in turn eased the country’s trade environment. These forms of FDI are expressed in various foreign country entry modes. 3.3.3 Foreign Entry Modes According to Hill (2009:493-501), the following are foreign firm entry modes into countries: Exporting: is a process of manufacturing the product in a centralized location (home or abroad) and exporting it to other national markets. Turnkey projects: when the contractor agrees to handle every detail of the project for a foreign client, including the training of operating personnel. At completion of the contract, the foreign client is handed the “key” to a plant that is ready for full operation. This is a means of exporting process technology to other countries. Turnkey projects are most common in the chemical, pharmaceutical, petroleum refining and metal refining industries, all of which use complex, expensive production technologies. Licensing: a ‘licensing agreement’ is an arrangement whereby a licensor grants the rights to intangible property to another entity (the licensee) for a specified period and, in turn, the licensor receives a royalty fee from the 27 licensee. The term ‘intangible property’ includes: patents, inventions, formulas, processes, designs, copyrights, and trademarks. Franchising: franchising is similar to licensing, although franchising tends to involve longer-term commitments than licensing. Franchising is basically a specialized form of licensing in which the franchiser not only sells intangible property (normally a trademark) to the franchisee but also insists that the franchisee agree to abide by strict rules as to how it shall do business. The franchiser also often assists the franchisee to run his/her franchised outlet on an ongoing basis. Joint-ventures: entail establishing a firm that is jointly owned by two or more otherwise independent firms. Establishing a joint venture with a foreign firm has long been a popular mode for entering a new market. The most typical joint venture is a 50/50 venture in which there are two parties, each of which holds a 50 percent stake and contributes to the team of managers to share operating control. Junjie (2008), says that this type of entry mode was the dominant one in China because, before 1999, nearly 40% of foreign investments were joint-ventures. Wholly owned subsidiaries: in this entry mode, the firm owns 100 percent of the stock. Establishing a wholly owned subsidiary in a foreign market can be done in two ways. The firm either can set up a new operation in that country, often referred to as a Greenfield venture, or it can acquire an established firm in that host nation and use that firm to promote its products. Juinjie (2008) argues that since 2000, in China, this entry mode has steadily increased and from 1997 to 2005 it rose from 35.8% to 71.2% to become the new dominant entry mode. In the case of the Republic of Côte D’Ivoire, the following entry modes are most commonly used. This involves, exporting, turnkey projects joint-ventures and wholly owned subsidiaries. 28 3.3.4. Influencers of Foreign Direct Investment Influencers or factors of Foreign Direct Investment (FDI) may not have the same impact in investors’ decisions to invest in a particular foreign market. It follows therefore that every investor will seek to work with an influencer that has specific impacts on their investment decision. The implications are that an influencer may be deemed necessary for FDI inflow in one location but not necessarily in another. This reality presents a level of difficulty in ascertaining accurately just which factors represent the most important determinants of FDI. The following discussion focuses on the nature of the influencers of Foreign Direct Investment (FDI). 3.3.4.1. Policy Framework According to World Investment Report (1998), ‘policy framework’ refers to Economic, political and social stability; rules regulating entry and operations (of FDIs); standard of treatment of foreign affiliates; policies on functioning and structure of the markets; International agreements on FDI; privatization policy; trade policy (tariffs and non-tariff barriers and coherence of FDI) and tax policy. Dunning (1993; 1994), Audrey et al. (2003), and Mottaled (2007) support the view that policy framework is an important FDI influencer. 3.3.4.2 The Economy Marios and Spyros (2007:493) argue that the level of socio-Economic development, functionality of market institutions and their mechanisms, stability of the foreignexchange market are important Economic influencers of FDI inflows. Audrey et al. (2003) Also note that knowledge and experience of the foreign market, size and growth of the foreign market, costs of transport, materials and labour, are important Economical influencers of FDI. Finally, Saudagaran and Diga, (1997, cited by Orhan and Ray, 2009:8) argue that: “besides Macroeconomic stability, the performance of 29 emerging market economies in attracting foreign investments is closely associated with the quality of financial reporting”. 3.3.4.3 Infrastructure Dunning (1993; 1994), Audrey et al. (2003) and Mottaled (2007) have all presented the importance of infrastructure as Foreign Direct Investment influencers. As an example, Audrey et al. (2003, quoted in Christodoulou, 1996) mention that infrastructure in the context of FDI incorporates such factors as expenditure on roads, transport and hospitals. She also explains that it is related to the factor of “quality of life,” which is regarded as an increasingly important incentive in attracting foreign investors, by encouraging senior personnel to locate to a region. 3.3.4.4 Natural Resources According to Dunning (1988) and Marios and Spyros (2007:493), endowment with natural resources, particularly labour and raw materials, are widely acknowledged as influencing a firm’s FDI decision making processes. 3.3.4.5 Location Specific Advantages The geographical location of a country is considered to be one of the key advantages of FDI attraction to that country (Coskun,2001: 222). Côte D’Ivoire is very well situated geographical as discussed in chapter 2 and hence plays an important role in the Economic activity of the West African Economic and Monetary Union (WAEMU), where it accounts for a 40% share of this Union’s reserves (Ken, 2010). The location specific advantages have also been discussed in studies such as by Dunning (1981), in which this author suggests that TNCs will invest in a foreign location only if the latter offers certain location-specific advantages in terms of resources and facilities that make it possible for the TNCs to explore their firmspecific ownership advantages. 30 The government of the Republic of Côte D’Ivoire has always regarded its 1) economic stance, 2) natural resources, 3) location-specific advantages and 4) infrastructure as the country’s main influencers of foreign direct investment. It is only in more recent times that the government FDI policy framework has been expanded to include other factors that have made it more attractive. In addition to the above influencers, according to Dunning (1993:56-62), the influences of FDI is determined by the multinational enterprise’s strategic objectives as FDI influencer and it is characterized by the following factors: (i) the resource seekers, (ii) the market seekers, (iii) the efficiency seekers, (iv) the strategic asset seekers, (v) and other motives for MNE activity. It has been observed in recent years that a few countries have altered their stance visa-vis overseas investment. They have reset their Economic policies in order to suit the interests of the overseas investors. Those countries have increased the transparency of their existing legal frameworks. That was done so the overseas companies can understand the implications of their investment in a particular country and take the appropriate decisions. This is supported by Wells and Wint (1990), who conducted studies on 18 developed and 32 developing countries. Their study indicated that promotion had a statistically significant positive impact on investment flows to the full sample of countries and to developed and developing countries, which were tested separately. Their research suggests that promotion can help influence inflows of FDI, which has been particularly encouraging to developing countries eager to attract such investment. Many such countries have developed special programs geared toward that. Since then, according to Alvin and Densil (2002), most developing countries have shifted toward more liberal attitudes toward FDI. The eclectic paradigm of Dunning, also known as the OLI paradigm, proposes that the undertaking of FDI is determined by the realization of three groups of advantages: (1) Ownership advantages, specific to the company and are related to the accumulation of intangible assets, technological capacities or product innovations. (2) 31 Internalization advantages, which stem from the capacity of the firm to manage and coordinate activities internally in the value added chain. They are related to the integration of transactions into multinational hierarchies through FDI. (3) Location advantages, which refer to the institutional and productive factors which are present in a particular geographic area. They arise when it is better to combine products manufactured in the home country with irremovable factors and intermediate products of another location (Jose, and Javier, 2001:271). 3.3.5 Challenges/Benefits of Foreign Direct Investment 3.3.5.1. Challenges of Foreign Direct Investment The following are challenges of FDI: culture, ethnics and entry mode to the new market, environmental aspects and consideration, and implementation of change regarding home management or marketing practices. All those aspects are challenges associated with FDI and, if not managed carefully, will result in loss for the home country and lack of development for host country (Hill, 2007:268-276). According to Anthony and Kwame (2008), “FDI has proved to be resilient during financial crises; for example, it was critical in East Asian countries during the global financial crisis between 1997 and 1998. The resilience of FDI during financial crises was also evident during the Mexican crisis of 1994 to 1995 and the Latin American debt crisis of the 1980s”. In addition, he also argues that in any FDI undertaking there are some risks that should be considered and, among them, is exchange rate volatility. Exchange rate volatility is the most basic risk measure that may confront investors and it refers to the short-term deviations of the exchange rate around its long-term trend. Fluctuations, whether positive or negative, are undesirable as they have the tendency of increasing risk and uncertainty in International transactions, thereby discouraging trade and investment flows. 32 Environmental pollution, inter-regional Economic disparities as a result of the uneven distribution of FDI, were also presented as challenges by Sun (1998:17) in China, while Ronald (2007) found a negative effect of FDI on child labour. By the same token, Recep and Bernur (referred to in the study by Papanek (1973), and Baharumshah and Thanoon (2006)) argue that foreign aid, private investment and other capital crowded out national savings, therefore, reduction in domestic savings could lead to a further increase on the dependency on foreign capital. It’s also recognised now that an important challenge to FDI inflow that faces the Republic of Côte D’Ivoire includes political instability due to undemocratic practices and the resultant civil wars. This is also true of other sub-Saharan countries. 3.3.5.2. Benefits of Foreign Direct Investment Among the enormous benefits that host and home country can gain are the following: 3.3.5.2.1 Host Country Beside the two benefits listed below, FDI can play an important role in the Economic growth of the recipient country. 3.3.5.2.1.1 Employment There is ample evidence in the available literature that employment is potentially a major FDI benefit for a host country (West Africa Review, 2001; UNCTAD, 2006, and Hill, 2007:268-276). For example Jayaraman (2007:16) found that FDI had a positive and statistically significant impact on Fiji’s employment rate. 3.3.5.2.1.2 Resources Transfer Resources transfer, such as capital, technology and management (knowhow) transfers, are FDI benefits for the host country (Hill, 2007:268-276). In addition to capital gains, Bala (2005:6) identified the following benefits from FDI for the developing countries: management know-how, new technology and the foundations for research and development (R&D). He argues that as the result of the interaction 33 between foreign and domestic firms technology is transferred, thus allowing local firms to build their own competencies. An important result of the transfer and learning of such competencies is an increase in productivity. The above mentioned benefits from FDI are also related to the Republic of Côte D’Ivoire. As an example, 54698 new job opportunities were created since 1996 up to 2009 corresponding to the inflow FDI for that period (see Table 3.7). Among the new job opportunities created, 50011 were Ivorian and the remaining 4687 were taken up by expatriates. 3.3.5.2.2 Home Country 3.3.5.2.2.1 Increased Profitability According to Hill (2007:268-276), market expansion, first mover advantages, and economies of scale are among the investing or home country benefits of FDI. In addition to these benefits, the latter authour adds that the balance of payment of the home country, will show up positively from the year of return on investment. Dunning (1994) provides a range of specific advantages accrued by home economies, also the result of TNCs: - Tend to be more dynamic than local state and private enterprises - Can restructure enterprises more quickly - Operate more capital intensively - Provide more training - Operate with higher labour productivity Its’ important to note that in addition to the specific advantages that FDI investors can gain, the Republic of Côte D’Ivoire now provides a more skilled labour for the TNCs to assist in increasing its productivity. In addition, the new investment code can assist the enterprises to invest and become involved in the country’s economy more quickly. 34 3.3.5.2.2.2 Competitive Advantages First mover advantages and learning of valuable skills were presented by Hill (2007:268-276) as an FDI benefit for the home country, while Dunning (2001:184) states that “MNEs from all countries are increasingly reaching beyond their national borders to create or gain access to resources and capabilities which complement their existing core competencies”. It is the researcher’s view that those two benefits can contribute to the TNCs competitive advantages in a host country the Republic of Côte D’Ivoire. In addition to the above, the West Africa Review (2001) argues that FDI can (1) create employment in host economies; (2) be vehicles of transfer of technology; (3) provide superior skills and management techniques to host economies; (4) help in the capital formation process; (5) facilitate local firms’ access to International markets; (6) use local resources more efficiently and productively; (7) increase product diversity; (8) use environmentally clean technology; (9) observe human and labour rights and; (10) create a lot of linkage-effects in the economy, for both host and home countries alike. Therefore, they concluded by saying, FDI can be an engine of Economic growth in a host economy. Such investments can sustain and improve Economic development in a country or, for that matter, even a global region. Given the Economic conditions in Africa and its level of development the need for FDI in the region cannot be overemphasized. That continent needs to increase its share of global FDI inflows as one of the most likely ways to increase the needed external capital for its development. 3.4. Africa and Foreign Direct Investment 3.4.1 Share of Africa over the World Stock of Foreign Direct Investment As mentioned earlier, many African countries, including the Republic of Côte D’Ivoire, have historically found it difficult to attract FDI flows and, as a result, lag behind other regions of the world. 35 Table 3.2 Inward FDI stock for Africa, 2000 to 2007 2 000 2 001 2 002 2 003 2 004 2 005 2 006 2 007 15 5 World 786 700 6 6 164 222 759 522 8 170 827 9 587 059 10 180 063 12 470 085 210 560 393 Africa 152 614 149 561 164 652 202 233 240 887 270 984 335 435 429 3% 2% 2% 2% 3% 3% 3% 3% Share of Africa (Adapted from UNCTAD FDI stock by host region & economy, 1980-2007, reflected in millions of US$.) Table 3.2 reflects the inflows of FDI in Africa for the period 2000 to 2007. By the year 2001, there was an inflow drop from US$152614 million in 2000 to US$149561 million. The remainder of the proceeding years show an increase in terms of dollar amounts. As an example, from US$164652 million in 2002, to US$393429 million in 2007, Africa observed an increased FDI inflow during six consecutive years, despite the share in 2002 and 2003 (2%) remaining the same in 2001. Further information is that, an important increase of the world’s Inward FDI from US$5 786 700 million in 2000 to US$15 210 560 million in 2007 can be observed, which reflects the original figure tripled; while, for the same period, Africa’s Inward FDI doubled from US$152614 million to US$393429 million. According to Jacob and Simon (2006) “the growing investment gap and the declining foreign aid in recent years has compelled many African countries to turn to FDI as a means to avoid development financing constraints”. This could explain African’s Inward FDI increase for that period. Figure 3.3 illustrates this. 36 Figure 3.1 Share of Africa Inflow of FDI over the World Inflow of FDI stock Source: Adapted from UNCTAD 2007 Figure 3.2 clearly shows a general trend in regards to the non performance of Africa as a continent vis-a-vis World Inward FDI stock. From 2000 up to 2007, the share of Africa in the world FDI stock was a mere 3%., Elizabeth (2001) uses this example to explain that during the periods 1980-1984 and 1994-1997, the annual average of FDI to developing countries increased by 1630%, while the annual average of FDI to Africa increased by 496%. As a result, Africa’s share in total FDI flows has dropped significantly, from 36% in 1970-1974 to 10%in 1980-1984 and to 3% in 1995-1999. Africa’s non performance is also explained by Jacob and Simon (2006), the “investment rate (share of investment in GDP) in Africa has on average, declined from 28.5% during 1974-1980 to 20.2% during 1991-1996”. As a conclusion they said that: “in the past Africa attracted FDI as a result of her abundant natural resources and size of domestic markets”; which, according to the researcher, could be one more reason that explains Africa’s poor performance in attracting FDI inflows. 37 3.4.2 Performance of Different Africa Regions for Foreign Direct Investment Table 3.3 FDI inflow for different regions of Africa 2000 2001 2002 2003 2004 2005 2006 2007 116 141 North Africa 45 688 50 637 56 029 65 736 75 035 84 700 293 460 West Africa 33 403 34 572 37 947 41 991 46 035 50 584 66 986 83 171 Central Africa 5 805 7 353 9 495 12 741 15 422 18 882 22 125 26 209 East Africa 7 132 7 922 8 895 10 719 12 298 12 800 15 894 19 489 104 114 123 Southern Africa Total 60 586 49 077 52 286 71 047 92 096 019 138 100 152 149 164 202 240 270 335 393 614 561 652 233 887 984 435 429 (adapted from UNCTAD 2008 Inward FDI stock, by host region and economy, 1980 to 2007and reflected in millions of US$.) Table 3.3 helps to show how region’s in Africa have observed a consecutive increase of FDI inflow for the period 2002 to 2007, except Southern Africa which has observed a decrease in FDI inflow for two consecutive years, 2001 to 2002. North Africa and Southern Africa shared the leading position. In 2000, the Southern Africa region (with US$60 586 million) registered the largest amount of FDI inflow, followed by the North Africa region (with US$45 688 million), while during 2001 to 2002, the North Africa region was at the first position with US$50 637 and US$56 029 million respectively, against US$49077 and US$52 286 million for Southern Africa region for the same period. From 2003 up to 2005 the Southern Africa region recorded the highest performance, while in 2006 to 2007 the North Africa region with US$116 293 and US$141 460 million respectively was the first recipient of Africa FDI inflow. 38 Figure 3.2 Share of FDI inflow for different African regions (Adapted from UNCTAD 2008) The West African region is at the third place in terms of FDI performance, with US$33 403 million in 2002; the region almost tripled its performance in 2007, with US$83 171 million, while Central Africa and East Africa sharing respectively the fourth and fifth positions accounted for US$5 805 and US$7 132 million in 2000, up to US$26 209 and US$19 489 million respectively in 2007. It is also important to mention that, while good performances generally were observed for the West African region, in terms of inflow of FDI, the Republic of Côte D’Ivoire does not appear to have benefited as much, mainly due to the country’s political crisis of 2002. The total amount of FDI inflow dropped significantly from 301,717,554,551 billion FCFA in 2001 to 70,698,716,437 in 2002 and then to 46,603,644,430 billion by 2004. Benefits of FDI inflow to this country only started showing in 2007, corresponding to the implementation of the Ouagadougou peace agreement. About 63% of the FDI flow to Africa during 1995 to 1999 was concentrated in only five countries: Angola, Egypt, Morocco, Nigeria and South Africa (Jacob & Simon, 2006). 39 In conclusion, according to UNCTAD (2007) it is argued that: “As a result of the commodity price boom, income on inward FDI grew by 31% in 2007, and the rate of return on investment in Africa was the highest among developing regions in 2006 and 2007. A large proportion of FDI in 2007 concentrated on expanding projects related to natural-resource exploitation, partly through reinvested earnings. As a result, the share of reinvested earnings in total FDI inflows increased to 28% and foreignexchange reserves in the region grew also by some 36% in 2007, and by even more in some major oil-exporting countries such as Nigeria and the Libyan Arab Jamahiriya”. Despite the higher inflows, Africa’s share of global FDI remained at around the 3% mark and the prospects for increased FDI inflows in 2008 was promising, they added. 3.5 Côte D’Ivoire and Foreign Direct Investment The Government of Côte D’Ivoire encourages Foreign Direct Investment, as part of that country’s new investment code adopted by the National Assembly on July 1995 (New Investment Code, 1995). That new policy seeks to promote and stimulate FDI through bureaucracy elimination, reduction of cost of investment and the establishment of efficient official procedures. It provides exemption from tax and customs duties for and guarantees to the investor. There are no significant limits on foreign investment in terms of levels of foreign ownership or sector of investment (New Investment Code, 1995). The new code introduced two incentive schemes: (e) The declaration scheme, which enables any investment regardless of the cost to be eligible, within a maximum of 48 hours and in almost an automatic manner, to the benefits contained in the code on the basis of a simple declaration of the investor testified by the Investment Promotion Centre in Côte D’Ivoire (CEPICI). This scheme is applicable to all sectors of activities other than transport, trade, construction and public works, and finances. It 40 only covers the investments relating to the starting of new activities, (New Investment Code, 1995). (f) The approval scheme covers investments where costs are over 500 million FCFAs. It also concerns all sectors of activities excluding finances, construction and public works. It takes into account all investments, regardless of their nature (setting up or development of activity) (New Investment Code, 1995). Foreign Direct Investment plays a key role in the Ivoirian economy, accounting for between 40% and 45% of total capital in Ivoirian firms. France is overwhelmingly the most important foreign investor. In recent years French investment has accounted for about one-quarter of the total capital in Ivoirian enterprises and between 55% and 60% of the total stock of foreign investment capital (U.S Bureau of African Affairs, State Report: 2007). As mentioned above, and referred to in Table 3.3, since 1995 the Republic of Côte D’Ivoire has offered a new code of investment with two incentive schemes. From that period up to 2002, the declaration scheme registered between 16 and 30 declarations per year, with investment amounting to 1,152,651,559 to 4,145,352,597 billion FCFA per year, whereas the approval scheme observed an increase from 57 to 84 approvals per year amounting to 67 932 006 578 to 299 292 702 351 billion FCFA per year. From 2002 up to 2009, with the political crisis (rebellion), an increase in FDI inflow was observed for the declaration scheme and a decrease for the approval scheme; 10 to 87 declarations were registered per year amounting to 2 835 850 099 to 5 816 938 924 billion FCFA per year and from 44 down to 9 (the first quarter of 2009) approvals were registered per year, with investment amounting to 14 262 558 695 to 335 213 957 425 billion FCFA per year. 41 The change observed in the number of declaration schemes (increase) and approval scheme (decrease) was due to the successive political crises that started in 2002 and got worse in 2004, when the French army destroyed the Republic of Côte D’Ivoire air fleet and killed more than 100 Ivoirian citizens (State Report: November 2004); therefore, investors became more cautious about their investment. Most of the investments made in that period were made under the declaration scheme with less than 500 million FCFAs, just to wait until the advent of better political conditions. Table 3.4 C.I FDI Record for Declaration and Approval Schemes from Investment Records (1996 -2009) YEAR INVESTMENTS STANDING Attested Declarations file Authorized Approval file Total (declarations +approval) 1996 24 3,026,816,091 57 126,551,003,314 129,577,819,405 1997 16 1,152,651,559 73 265,042,252,769 266,194,904,328 1998 23 4,145,352,597 84 202,127,400,073 206,272,752,670 1999 30 3,151,630,266 73 195,261,810,159 198,413,440,425 2000 30 2,863,918,885 76 113,665,180,743 116,529,099,628 2001 19 2,424,852,200 46 299,292,702,351 301,717,554,551 2002 23 2,766,649,859 44 67,932,066,578 70,698,716,437 2003 37 2,086,835,903 33 70,840,501,257 72,927,337,160 2004 37 3,533,382,907 16 43,070,261,523 46,603,644,430 2005 67 3,835,483,044 24 118,588,609,940 122,424,092,984 2006 87 3,046,661,611 14 80,210,585,672 83,257,247,283 2007 69 5,816,938,924 29 335,213,957,425 341,030,896,349 2008 49 4,831,158,242 50 226,652,033,708 231,483,191,950 17-Mar- 10 2,835,850,099 9 14,262,558,695 17,098,408,794 521 45,518,182,187 628 2,158,710,924,207 2,204,229,106,394 2009 TOTAL Source: Centre of Promotion and Investment - CEPI - Republic of Côte D’Ivoire In summary, from the period of 1996 to the first quarter 2009, 521 declarations were registered for a total amount of 45 518 182 187 billion FCFA, when 628 approvals were given for a total investment amounting to 2 158 710 924 207 billion FCFA. 42 2007 was the best year in all with 5 816 938 924 billion FCFA declared and 335 213 957 425 billion FCFA approved in FDI inflow. The total FDI inflow (declaration and approval) for the same period is 2 204 229 106 394 billion FCFA; again 2007 had the biggest share, with 341 030 896 349 billion FCFA and this is the result of the political accord signed between the C.I government and the instigators of the rebellion. The ‘worse year’ was 2002, recording 70 698 716 437 billion FCFA and 46 603 644 430 billion FCFA. 3.5.1 Impact of Foreign Direct Investment on Côte D’Ivoire The Republic of Côte D’Ivoire, as the rest of African countries have not gained much from FDI inflow and the impact of FDI on Republic of Côte D’Ivoire will be discussed from the following viewpoints: 1. the impact on the economy, and 2. the impact on employment; these are discussed in more detail in the sections that follow. 3.5.1.1 Impact on the Economy As discussed earlier in chapter 2, Republic of Côte D’Ivoire has a broad economy. In the process of opening up economies to participate in some of the positive impacts of globalization, countries position themselves in respect of attracting foreign direct investment. In this regard the Ivorian government officials did not want to lag behind; therefore, they opened up the economy to become more efficient in FDI attraction. While the government of the Republic of Côte D’Ivoire encourages foreign investment, political instability, for example the 2002 conflict, significantly undermines investor confidence in the country. Political violence and deterioration of the investment climate have also hampered privatization efforts (U.S Bureau of African Affairs, State Report: 2009). The 2002 political crisis had a negative impact on the Republic of Côte D’Ivoire’s FDI. According to MIGA (2010: Online), the conflict and political instability took a heavy toll on economic growth. During 2000 to 2006, the average Economic growth turned negative (-0.4 percent) and was well below the average rates in the rest of WAEMU (4.1 percent) and sub-Saharan Africa 43 (4.9 percent). The partition of the country disrupted trade within the country, while diminishing Republic of Côte D’Ivoire’s role as a regional hub. Export volume growth fell between 1994 to 1999 (8.7 percent) and 2000 to 2006 (2.3 percent). Foreign direct investments took a major hit and many foreign businesses closed or significantly scaled down their operations, awaiting the permanent resolution of the crisis. Developments in Côte D’Ivoire have had a negative impact on the WAEMU regional trade and output. The Ouagadougou Accord gave new impetus to political normalization and the economy gradually began to respond favourably to this and the resultant more stable environment (MIGA, 2010). Since 2007 to the present, the Côte D’Ivoire economy has shown significant improvement when compared to the period before 2007. As an example, output growth in 2008 was 2.3 percent, driven by a recovery in oil and gas output. And the value of exports increased by 8.3 percent in 2008, from 5.7 percent the previous year. The current account balances (excluding official transfers) also have improved as a percentage of GDP (MIGA, 2010). Figure 3.4 depicts the recovery of the Republic of Côte D’Ivoire’s economy. The negative total GDP observed for 2002 and 2003 increased to 1.6 and 1.8 in 2004 and 2005 respectively, but dropped to 0.7 in 2006. From 2007 we observe an increase from 1.6 up to 3.8, in 2009 (Republic of Côte D’Ivoire’s Department of Economy, State Report: 2009). 44 Figure 3.3: Total GDP over the period 2002 to 2009 (Source: Adapted from Department of Economy, State Report: 2009) In addition, MIGA (2010) made a projection of GDP growth of 4.2 percent in 2010, and to surpass 5.0 percent per annum over the period 2011-2013, as productivity and investment is expected to return to their pre-crisis growth path. Performance as per Economic sector, reflecting their contribution to the total GDP, is presented in Figure 3.5. • The primary sector contribution was -0.2%, in 2002; which was followed by the positive increase of 0.9% up to 1.4% during 2003-2006, and by a constant negative -0.3% for the period 2007-2008. In 2009 the sector had recovered with a positive contribution to GDP of 1.8% • The secondary sector showed a negative contribution of -1.4% down to -2.4% for the period 2002-2003; which was followed by a slow positive increase of 0.6% up to 1.7% during 2004-2005. In 2006 that positive increase dropped to -1.9%, followed again by the slow positive increase of 0.4% to 0.8% for the foregoing two years and down to -0.3% in 2009. • The tertiary sector showed a constant negative GDP contribution of -0.6% down to -1.1% for the period 2002-2005; which was followed by the constant positive increase of 0.7% up to 1.8% during 2006-2009. • The non-trade sector showed a constant positive contribution toward the GDP. From 0.6% during 2002-2003, it dropped to 0.1% in 2005 and increased again 45 to a constant 0.6 during 2007-2008. In 2009, it showed a loss when it decreased to 0.1% from the previous year. Figure 3.4 Performance as per Economic sector, to the total GDP. (Source: Adapted from Department of Economy, State Report: 2009) Table 3.5: GDP as per Economic sector Economic sector's 2002 2003 2004 2005 2006 2007 2008 2009 - primary sector % -0.2 0.9 1.0 1.1 1.4 -0.3 -0.3 1.8 - Secondary sector % -1.4 -2.4 0.6 1.7 -1.9 0.4 0.8 -0.3 - Tertiary sector % -0.6 -0.9 -0.2 -1.1 0.7 0.9 1.2 1.8 - Non trade Sector % 0.6 0.6 0.2 0.1 0.5 0.6 0.6 0.5 - Total GDP % -1.6 -1.7 1.6 1.8 0.7 1.6 2.3 3.8 (Source: Department of Economy, 2009) In summary, all the sectors negatively contributed to GDP in 2002 (GDP 2002, 1.6%) but in 2003, with the negative -1.7% GDP, only the primary sector contributed positively, while the secondary and tertiary sector contributions remained negative. From 2004 up to 2009, with the positive increase in GDP of 1.6% up to 3.8%, all sectors managed to contribute positively to the total GDP. Other impacts of FDI on the Côte D’Ivoire’s economic activities are presented in Table 3.6 below 46 Table 3.6 Côte D’Ivoire’s total FDI as per different Economic activities for the period 1996 2008. Percentage Field Total FDI inflow 1996-2008 Food processing industry 468,328,871,251 21% Steel and Engineering Industry 39,349,910,958 2% Health 44,401,787,027 2% Tourism & Hotel Business 53,873,292,350 2% Telecommunications 942,887,896,036 43% Chemical Industry 47,418,462,203 2% Wood Industry 44,637,587,437 2% Packaging Industry 16,164,646,144 1% Textile Industry 62,166,507,179 3% Transport 131,871,891,975 6% Services 104,786,353,505 5% Gas & Oil Industry 40,541,869,530 2% Trade 43,735,102,072 2% Construction Industry 17,492,477,536 1% Plastics Processing Industry 13,092,221,575 1% Various Industries 48,121,919,296 2% Others 32,533,255,906 1% TOTAL 2,204,229,106,394 100% Source: Cabinet of Prime Minister, Centre of Promotion and Investment (CEPICI, 2009) The Côte D’Ivoire economy, like the economy of other countries, is based on the following three Economic sectors: primary, secondary and tertiary; represented here respectively as 26%, 21% and 53% of the GDP. (Department of Investment and Promotion Centre, State Report: 2008). Table 3.6 describes the total FDI inflows for the period of 1996-2008 as per economic activities. Seventies (17) Economical industries were among the recipient of that total inflows FDI. The telecommunication industry accounted for 942 887 896 47 036 billion of FCFA, representing 43% of the total FDI flows for the period. The agro-industry is a second recipient with 468 328 871 251 billion FCFA, followed by transport with 131 871 891 975 billion FCFA, and services accounted to 104 786 353 505 billion FCFA represented, respectively, 21.24%, 5.98% and 4.75% of the total FDI flows for the same period. The leather and I.T industries are at the bottom, sharing respectively 95 394 400 and 42 955 627 million FCFA. It is important to notice that the telecommunication and agro-industries together accounted for 64% of the total inflows FDI during the period under consideration. Most of the 17 Economic activities or industries have shown increased FDI inflows for the period 1996 to 1998, followed by the decreased due to the political crisis for the period 1999-2006, and a considerable increase by 2007; merely due to the Ouagadougou accord signed between the government and the rebellion. An increase in FDI inflows into the declaration scheme were observed as investor confidence grew. From the above discussions, we have explained the impact of FDI on Côte D’Ivoire’s economy by using select available economic indicators such as the annual GDP data, annual GDP data per economic sector activity and also data from the highest recipient industry sector for the period 2000 to 2009. It is important to note that, the Côte D’Ivoire economy has been impacted upon positively from 2004 up to 2009 via a positive GDP rate. This can perhaps be explained by the large amount of inflow FDI registered during 2000 and 2001. 3.5.1.2 Impact on Employment According to Diby (2007:177), the Ivoirian government was for three decades the main employer, principally because of the job stability within the administrations but, due to the strong wages impact on the state budget, International financial institutions such as the International Monetary Fund (IMF) subjected the country to stringent structured programs that resulted in employment levels falling quite drastically. For example, the number of staff in the government workforce which at one point totalled 116 000, decreased to 104 454 individuals by 2005. 48 Under the structured program the government was forced to look for alternative means of job creation. Since that period the government has placed emphasis on employment as being an important national priority. The result was that FDI inflows have generally impacted positively on the Côte D’Ivoire employment rate depending on government priority. For example, agriculture remains a key sector in the Ivorian economy, accounting for 26% of GDP and employing the largest part of the workforce. It also accounts for around half of the country’s exports. For the industry sector, manufacturing accounts for 21% of the GDP and employs 13% of the workforce, while the services represent 53% of GDP and employ 26% of the workforce. (Department of Economy, State Report: 2008). The effects of the imposed restructuring and the political instability that followed resulted in important Social repercussions. One outcome was the increase in poverty, in turn has led to massive population displacements, rising unemployment, and a worsening composition of public expenditures (MIGA, 2010). Table 3.7: Employment generated by Côte D’Ivoire FDI inflow, 1996 to 2009 Year Number of Employment Generated Ivoirian Expatriate 1996 3,073 2,750 323 1997 5,419 4,804 615 1998 6,894 5,227 1,667 1999 4,966 4,796 170 2000 3,456 3,155 301 2001 9,122 8,559 563 2002 4,219 3,736 483 2003 2,077 2,013 64 2004 3,362 3,278 84 2005 4,360 4,241 119 2006 1869 1692 177 2007 2310 2224 86 2008 3155 3122 33 17-March-2009 416 414 2 TOTAL 54698 50011 4,687 49 (Source: Adapted from the Cabinet of the Prime Minister, Centre of Promotion and Investment, CEPICI, 2009). Table 3.7 indicates the impact of FDI on the employment for the period 1996 to 2008 for both the declaration and approval scheme. For better discussion, the impact on employment is presented as follows: 3.5.1.2.1 Before 2002 From 1996 up to 2001, the inflow of FDI generated more than 30 000 jobs were generated. Year 2001 registered the highest record of employment with 9 122 jobs. It is important to notice, again, that 2001 was the year when FDI inflows hit a record high, generating an income of 301 717 554 551 billion FCFA. In 1996, 3 073 jobs were registered, which figure was increased with each successive year to triple in 2001. Among the 30 000 jobs generated during that period, more than 85% of the employees are Ivorian and 15% expatriates (See Table 3.7). 3.5.1.2.2 After 2002 From 2002 up to 2008, the employment figures stagnated between 1800-4000 jobs per year with 85% of Ivorian employees. More than 20,000 new jobs opportunities were created. The job stagnation was due to the decrease observed by the inflow FDI for that period due the political crisis of 2002. In summary, 2001 revealed the best performance. The country registered its highest employment rate during that year, with 9,122 employees representing 17% of the population. The year 1998, has shown a second highest employment rate with 13%, representing 6,894 new jobs over the total jobs created. 1997 and 1999, with 5,419 and 4,966 sharing respectively 10% and 9% of the new employment creation, were the third and fourth best performing years see (Figure 3.6 refers.) Figure 3.6 also indicates those years 2002 and 2005, with an average of 4300 new jobs which represent 8% over the total employment opportunities. Year’s 2000, 2004 50 and 2008, accounted for an 8% share, with an average of 3 400 new jobs created. The lesser performing years were 2003 and 2006, with a share of 3%, which corresponds to an average of 2000 new jobs. Figure 3.5: Employment generated from FDI inflow for the period 1996 to 2009 (Adapted from the Cabinet of the Prime Minister, Investment and Promotion Centre, FDI data (2009)) In summary, 1149 declarations and approval schemes registered for the period 1996 to 2009 accounted for 2 204 229 106 394 billion FCFA FDI inflows, 54 698 new jobs were created of which 91.42% (50 011) were Ivorian and the remaining 8.6% comprised of were expatriates. In addition, the survey conducted by the Ivorian Agency of Promotion and Employment (AGEPE) in 2002 shows that the estimated working population was 6 006 190 individuals, less than 5% in 1995 of which 10.1% are government workers, 14% for trade sector and 61.3% for agriculture sector. 3.5.2 Republic of Côte D’Ivoire’s Infrastructure Since independence Côte D’Ivoire has placed a strong emphasis on growing its infrastructure network to enable and facilitate the development of industry and flow of goods around the country; and to also enable the transfer of goods to neighbouring 51 countries. This policy has boosted the Economic competitiveness of the country and consolidated its competitive advantage within the geographic sub-region (Diby, 2007:128). 3.5.2.1. Economic Infrastructures To investors Côte D’Ivoire offers a well established Economic infrastructure. The extent of the country’s roads sealed by bitumen has increased over the years and were, respectively, 530 km in 1960, 1070 km in 1970, 1740 km in 1975, 5600 km in 1995, and 6500 km during 2000-2005 (Diby, 2007:128). The classified roads network extends over 70 000 km, of which 6 500 km were under bitumen, which includes 150 km of motorways. This road network makes for easy linkages between the various large cities of the country as well as the supply of goods and services to the neighbouring countries (Côte D’Ivoire, Department of Economics, State Report: 2007). The Republic of Côte D’Ivoire is served by three International airports (Abidjan, Bouake, Yamoussoukro) and 14 aerodromes that serve individual cities, which currently receive 24 International airlines offering more than 200 flights a week. Of the airports, Abidjan International Airport is the busiest. In 2005 Abidjan registered 14 257 commercial flights that handled 745 180 passengers; which figure is down from that of 2000, when 1 081 496 passengers were handled (Diby, 2007:135). The railways network is 1260 km long (638 km in Côte D’Ivoire, 622 km in Burkina Faso), which links Côte D’Ivoire and Burkina Faso. Further, two International sea ports support Côte D’Ivoire (Abidjan and San-pedro); they are used as transit ports for its landlocked neighbouring countries to the north. After Durban harbour, Abidjan sea port is the second busiest port in Africa; with total traffic of 12 million tonnes in 1995, which increased to 14 556 414 million tonnes in 2000, and increased again to 18 661 784 million tonnes in 2005 - an increase of 40% over the period 1995 to 2005. The International trade with sub-region countries and other African countries was 3 546 847 million tonnes in 2000, which increased to 4 570 198 million tonnes in 2005 52 with Nigeria, from 383 925 million tonnes in 2000 up to 420 634 million tonnes in 2005 with Burkina Faso, from 549 556 million tonnes in 2000 down to 338 400 million tonnes in 2005 with Mali, from 345 951 million tonnes in 2000 up to 399 424 million tonnes in 2005 and from 1 555 196 million tonnes in 2000 up to 2 707 726 million tonnes in 2005 respectively with Senegal and other countries. However, since the beginning of the political crisis in 2002 the country’s second sea port (San-Pedro port) has experienced difficulties where the traffic tonnage was 1 353 474 million tonnes in 2000, which decreased to 1 001 991 in 2005. This reflected a decrease of 26% (Diby, 2007:131-134). The telecommunications network is dense and reliable. The total number of fixed-line telephones was 115 214 in 1997, which increased to 1 400 000 in 2004; and over 11 000 000 clients are served by the five mobile phone operators (Diby, 2007:141). The large cities are equipped with numeric telephone systems, which mainly make use of optic fibres for inter-city transmissions. The extensive development of the mobile telecommunications systems helps to cover nearly all the villages within the country (Department of Telecommunication Agency, State Report: 2007). The Republic of Côte D’Ivoire can boast of having a dense banking network: there are 19 financial organizations among which are 17 banks and 2 credit organizations. The deposit-taking banks have several windows in the interior of the country, foreign capital commercial banks (French, USA, British, Belgian, and African) and the representative offices of many foreign banks, among which are BNP Parisbas, Citibank and Standard Chartered (Diby, 2007:151). The Citibank and Standard Chartered Bank are more focused on corporate clients and investors. Three specialized banks were created, including: the Bank for Agriculture Development (BFA), the Bank for Regional Solidarity (BRS) (which was created by the Central Bank for West African States, to support SMME investors), and the Bank for Housing of C.I (BHCI). Recently the Bank of National Investment (BNI) was created to support different Economic sectors, notably agriculture and public works. 53 The Atlantic Bank of Côte D’Ivoire (BACI) is a privately owned Ivorian bank, with the corporate objective of supporting and sustaining national and foreign promoters for the development of Côte D’Ivoire, while ECOBANK has the sub-regional vocation added to their corporate objective (Diby, 2007:151). Finally, and according to Diby (2007:151), the country hosts the regional offices of a number of International financial institutions and the regional stock exchange (BRVM). In conclusion, the Republic of Côte D’Ivoire, has devoted enormous effort towards providing a strong economic infrastructure to facilitate trade among national investors. In addition the country has worked towards establishing useful relations with other parts of the world with the aim of being efficient with regard to International trade, in order to become more competitive in regards to FDI attraction. 3.5.2.2 Social Infrastructures Côte D’Ivoire boasts a relatively strong health system. Abidjan, the economic capital, hosts three teaching hospitals that maintain International standards. The large cities of the interior (Bouake, Daloa, Korhogo, Man, Abengourou, to name a few) have well maintained regional healthcare centres. On the whole, health cover in the Republic of Côte D’Ivoire is acceptable but investments for rehabilitation are needed (Department of Planning and Development, State Report: 2007). Focusing now on the education system and infrastructures, since independence the Republic of Côte D’Ivoire has placed a high priority on education and consistently devoted 40% of the national or state budget towards developing that sector. Consequently, the literacy rate is about 70% of the population (Diby, 2007:167). Public schools accounted for 88.36% of the total students in 2000 against 87.32% in 2005. It is important to note that the number of primary school students went down from 1, 943, 101 in 2000 to 1 661 901 in 2005 for both private and public schools. Complementing that, the medium sized cities have secondary schools. The number of private secondary schools that service this sector is higher than that of the public 54 schools, with 330 in 2000 which increased to 370 in 2005, against 201 which decreased to 152 for the same period. The number of secondary school students was 599 075 in 2000, which number increased to 660 152 in 2005 (Diby, 2007:168-169). There are three universities (Cococdy, Abobo, and Bouake), two university centres in Daloa and Korhogo, as well as higher schools that teach agriculture and commerce, most of which are located in Yamoussoukro, the political capital of the country. These efforts by public authorities are supplemented by the contribution of the private sector. Thus, within Republic of Côte D’Ivoire one finds the entire range of educational facilities from kindergarten to university level (Canadian and American universities), offering from general to vocational training, and from laic to confessional teaching (Republic of Côte D’Ivoire, Department of Economics, State Report: 2007). In addition the schooling rate of women is around 35% of the enrolment. The total number of university students is around 146 490 (Diby, 2007:171). It can be concluded that the Republic of Côte D’Ivoire offers sufficiently good social infrastructures for to serve as a further FDI attraction. Investors can access healthcare centres throughout the country as well as schooling systems in order to yield a robust labour force. 3.6 Research Problem and Question 3.6.1 Research Problem The research problem that arises from the above discussion is primarily about trying to resolve the poor levels of FDI into an African country such as Côte D’Ivoire. Specifically, it’s about the identification of the most useful mechanism that could be applied by Côte D’Ivoire’s investment and promotion center (CEPICI) and also about proposing and establishing an appropriate framework for attracting FDI to Côte D’Ivoire. 55 3.6.2 Research Question Following on from this problem, the research question posed for this study is as follows: What are the most critical determinants that should be addressed or established by the Republic of Côte D’Ivoire to make the country more competitive in attracting foreign direct investment? The ensuing Investigative Questions are then as follows: 1. What are the main determinants of Foreign Direct Investment attraction? 2. What determinants are applicable to Côte D’Ivoire in terms of establishing a competitive advantage to attract Foreign Direct Investment? 3. Which determinants are viewed as the most important by investors? 4. How can Côte D’Ivoire reshape or reorient its current strategies in attracting Foreign Direct Investment? 3.7 Conclusion Chapter 3 presented the literature review which provided the theoretical groundwork to clarify and create an overview of what is currently understood by the concept of International trade and define Foreign Direct Investment. An overview of the advantages and disadvantages of FDI was presented. The impact of FDI on the Republic of Côte D’Ivoire economy generally as well as its indicators eg employment were also discussed. The Republic of Côte D’Ivoire’s infrastructure was presented. Africa and different African regions’ attractiveness of FDI inflow were presented and discussed. International trade and its theories and how it can contribute to a nation’s economic growth was also discussed and a select example of a successful FDI recipients briefly presented. Finally a link is drawn between the main literature propositions and the raison d être of the study. In Chapter 4 the research methodology applied to the data collected for this study is discussed. 56 CHAPTER 4 RESEARCH METHODOLOGY 4.1 Introduction Chapter four (4) describes the major methodology used to collect the data which will be used to answer the research question and investigative questions. The chapter also addresses specific information on the research approach, research design and methodology chosen for this study. The sampling and data collection method as well as the development of the research instrument are also addressed. The administration of the survey is addressed, along with the limitations of the chosen methodology. Finally, the chapter concludes by considering the ethical issues concerning this research. 4.2 Research Approach/Paradigm A paradigm is a set of link assumptions about the world which is shared by a community of researchers investigating that world (Kuhn, 1962). Importantly, understanding the nature of a paradigm enables researchers to determine what problems are worthy of exploration and also what methods are available to them (Deshphande, 1983). In conducting research it is necessary to evaluate the two major paradigms, positivism and constructivism, before choosing a research methodology (Veal, 2005). Positivism is a research approach which treats ‘social facts’ as existing independently of the activities of both participants and researchers (Silverman, 2006). In methodological terms, this paradigm is characterised as using primarily quantitative methods that are interventionist and deconstructualised (Mertens, 1998). Conversely, the constructivist paradigm is characterised by using primarily qualitative methods in a hermeneutical and dialectical manner (Tashakkori and Teddlie, 2003). Constructivism, or the interpretive approach, takes the view that observations cannot be pure in the sense of altogether excluding the interests and values of individuals; 57 investigations must employ empathic understanding of those being studied (Tashakkori and Teddlie, 2003). The logical positivist view of the world is synonymous with the quantitative paradigm and descriptive research (Patton, 1980). This research falls under a positivistic paradigm with emphasis on a deductive approach because this study uses a set of pre-tested scales to collect data and create data structures to describe the perceptions and beliefs of parents. The research is descriptive as the study aims to provide a detailed and accurate picture of the Influencers of FDI. The study predominantly relies on quantitative data and the employment of a survey questionnaire, which is aligned with the characteristics of positivistic research (Neuman, 2006). 4.3 Research Design 4.3.1 Research Methodology A research design provides the glue that holds the research project together. A design is used to structure the research, to show how all of the major parts of the research project - the samples or groups, measures, treatments or programmes, and methods work together to address the central research question(s) (Coldwell and Herbst, 2004:35-36). For the purposes of this study a descriptive design was utilized. The aim of that type of design and research process is to describe the characteristics of phenomena (Collis and Hussey, 2009:334). This research study was conducted to understand and possibly provide Ivorian officials with the most important and accurate determinants which could assist them in the establishment of an FDI infrastructure. By using a descriptive design, the study utilises quantitative data by way of a structured questionnaire as well as through the use of secondary data. The 58 questionnaire developed by Tuselmann (1999), adapted and validated by Coskun (2001) and later again by Stoian and Filippaios (2008), was utilized, as it is based on the most appropriate FDI conceptual frame. Thus, in terms of measuring the constructs of FDI, this instrument is deemed most appropriate. To suit the Ivorian settings, the instrument was adapted accordingly. In the end, the questionnaire consisted of 16 items measured on a 4 point Likert scale (1 = not important; 2= of little importance; 3= important; and 4 = very important). Details of the questionnaire are presented in appendix B 4.4 Research Methods 4.4.1 Population According to Jill and Hussey, 2009:62, a population is a precisely defined body of people or objects under consideration for statistical purposes. Donald and Pamela (2006: 402), define a population as being the total collection of elements about which, for the purpose of this study, inference will be made. As an example, all office workers in the firm compose a population of interest. In this study the population of interest included all developing countries involved in receiving direct foreign trade in Africa. For the purposes of this study, Côte D’Ivoire was sampled purposively (conveniently) because as a country it bears important trade characteristics to other developing countries particularly those in Africa. The sample units of interest were found 1) in the Côte, D’Ivoire Promotion and Investment Center’s (CEPICI) repertory agenda for all foreign companies operating within Côte D’Ivoire, 2) the department of mining, and 3) one of Côte D’Ivoire’s telecommunication agency’s (ATCI) updated companies’ data list from which eighty (80) foreign companies were conveniently selected from a total of 400. 59 4.4.2 Sampling Procedure According to Donald and Pamela (2006: 402), the basic idea of sampling is that by selecting some of the elements in a population we may draw conclusions about the entire population. A population element is the individual participant or object on which the measurement is taken. It is the unit of the study. While an element may be a person, it can just as easily be something else. At this juncture every relevant government department or representative body dealing with International trade needed to be sampled so that full representativeness could be achieved. Following this process the selection criteria involved each relevant department being sampled and the key decision makers identified and selected. Regarding the foreign companies, the selection criteria was based on the Côte D’Ivoire Investment and Promotion Center (CEPICI) repertory agenda of all foreign companies operating in Côte D’Ivoire, in addition to that the Department of Mining and an Agency for Telecommunications in Côte D’Ivoire (ATCI) updated companies data list was consulted for establishing the sample unit. The sampling method used was judgmental, which is a non probability sampling method. Judgemental sampling is a type of purposive sampling in which the researcher judgementally selects elements to conform to some criterion (Coldwell and Herbst, 2004:81). In this study, a total of 80 foreign firms, operating within the dynamic economic sector for the past 10 years or had in excess of 30 years presence in Côte D’Ivoire were selected, as well as twenty (20) senior government officials were selected from a sample frame of 430. The questionnaires were sent to the selected officials and companies. The survey was conducted over a period of 4 months, from the beginning of January 2010 to the end of April 2010. A total of hundred (100) questionnaires were prepared and sent. Twenty (20) participants didn’t respond at all. Eighty (80) questionnaires were received back, with proof of reception but among which twenty three (23) were not filled up for different reasons such were: not competent to provide 60 information; need parent company authorization or need permission letter from Côte D’Ivoire government allowing their participation in this survey. Fifty seven (57) of the sampled population have effectively responded representing 57%. The researcher had expected less than 40% of the participants will not respond, meaning he would be happy to receive sixty (60) responses. In all forty three didn’t respond representing 43% of the sample population. 4.4 Methods of Data Collection In order to conduct data collection, Coldwell and Herbst (2004:48) have discussed issues regarding the questionnaires survey, which is summarized in Table 4.1 below. Table 4.1 Description of questionnaire survey METHODS OVERALL PURPOSE ADVANTAGES Questionnaires, When Can Survey quickly and /or easily anonymously feedback get information from Inexpensive to administer Wording can bias client’s people Easy to compare and analyze responses Can be administered to many Are impersonal people In Can get lots of data sampling expert Many sample questionnaires Does not get full story you in need a threatening way to non- be CHALLENGES completed Might not surveys, get careful may already exist Adapted from methods used by Coldwell and Herbst (2004:48) In the ambit of this study, the questionnaire based on a survey developed by Tuselmann (1999), and adapted and validated by Coskun (2001). The instrument was further validated by Stoian and Filippaios (2008), and was used to identify the views and arguments for the most important accurate factors influencing FDI attraction to Côte D’Ivoire. In order to suit the Ivorian setting, the instrument was adapted accordingly. In the end, the questionnaire had 16 items measured on a 4 point Likert scale (1 = not important; 2= of little importance; 3= important; and 4 = very important) from which quantitative data would be obtained. 61 need Three research assistants were recruited to distribute the questionnaires. The process lasted for a period of three (3) months due to the geographical location of some of the companies. Follow up calls were made to arrange a meeting with the Director General for an interview. The period February to April was used to collect the questionnaires. In the end, 57 completed questionnaires were received back representing 57% response rate. In summary, of the 100 questionnaires prepared and effectively distributed with proof of delivery, 80 were received back but 20 were not filled up. 57 responses were filled and received back, which represented a 57% response rate; which is below the expected projection of 60 positive responses. 4.5 Validity and Reliability Joseph et al. (2003:169-173) states that: “Accuracy is associated with the term validity while consistency is associated with the term reliability. Concerning reliability, a survey instrument (questionnaire) is considered reliable if its repeated application results in consistent scores. Reliability is concerned with the consistency of the research findings. If the instrument is a multi-item scale, then for it to be reliable the scores (ratings) for the individual questions (items) that comprise the scale should be correlated. The stronger the correlations the higher the reliability of the scale will be. Similarly, the weaker the correlations the more unreliable the scale will be”. Cronbach’s Alpha is used in this study to determine the reliability of the questionnaire. More information regarding the reliability of the questionnaire is provided in Chapter 5. According to Joseph et al. (2003:174-175), validity is the extent to which a construct measures what it is supposed to measure. Content validity “which involves a systematic but subjective assessment of a scale’s ability to measure what it is supposed to measure”; construct validity “which assesses what the construct (concept) or scale is, in fact, measuring”; and criterion validity “which 62 assesses whether a construct performs as expected relative to other variables identified as meaningful criteria” are measurement approaches of validity. For the purpose of this study the SPSS was used to assess both validity and reliability measurement. 4.6 Ethical Considerations For Donald and Pamela (2006: 116) ethics are norms or standards of behaviour that guide moral choices about our behaviour and our relationships with others. The goal of ethics in research is to ensure that no one is harmed or suffers adverse consequences from research activities. However, unethical activities are pervasive and include violating nondisclosure agreements, breaking participant confidentiality, misrepresenting results, deceiving people, invoicing irregularities, avoiding legal liability, to mention a few. Saunders, Lewis and Thornhill, (2000:130), refers to “ethics” as the appropriateness of the researchers’ behaviour in relation to the rights of those who become the subject of research, or are affected by it’. Most ethical issues in research fall into one of four categories namely protection from harm, informed consent, right to privacy, and honesty with professional colleagues (O’Leary, Z. (2004). In conducting this research study the following ethical issues or considerations were observed; participants are informed about the nature of the study to be conducted, and given the choice or either participating or not participating. Furthermore, they will be given the right to withdraw from the study at any time, as participation on a study should be strictly voluntary (Collis & Hussey 2003:38) 63 4.7 Data Analysis When conducting research there is no substitute for having a clear idea of what is being looked for. The research question(s); and the need to stay as close as possible to the raw data as it is provided by the participants, the texts, the documents and so on, so that you can get a ‘feel’ for what is emerging. Then you stand back, to clarify the areas of questions, the theories and the conceptual framework and start to put it all into some kind of order, so that your data can be properly analyzed and findings drawn from the analysis that relate to your original questions and conceptual framework (Gina, 2008:313). Since the questionnaire was to aid in generating quantitative data, the collected data would be analyzed as follows: On the one hand, a description of respondent characteristics in terms of frequency would be drawn from the data; and, on the other, inferential analysis, where factor analysis, reliability tests, KMO and Bartlett’s test, principal component analysis, variables mean rankings and mean ratings for components will be conducted on the data. In addition, for this purpose the statistical package for the social sciences (SPSS) software package at Tshwane University of Technology (TUT) would be applied. 4.8 Conclusion In summary, the purpose in Chapter 4 was, firstly, to describe and, secondly, to justify the following: The research Approach (a positivistic paradigm) and the research method applied in this study; the data collection method used (a structured survey questionnaire); the population, sampling method (judgemental, nonprobability type), sample size (100), ethical considerations to be considered and statistical techniques and tools used to analyze the data. The next chapter focuses on the results. 64 CHAPTER 5 ANALYSIS OF DATA OR RESULTS 5.1 Introduction An overview of the results obtained from the statistical analysis is provided in Chapter 5. The overview is restricted to the analysis of the collected data, without drawing any general conclusions or comparing results of those discussed in the literature review (Chapter 2). The research findings are evaluated in relation to the goals and objectives of the study. Descriptive and inferential statistical techniques are used to analyze the data and some results are also presented graphically. 5.2 Descriptive Statistical Analysis 5.2.1 Frequency Distribution of the Respondents A total of 80 questionnaires were distributed and 57 fully completed questionnaires were returned, which is a response rate of 71.25%, which is acceptable as SPSS has processed the data for factor analysis which required a minimum of a 60% response rate. All questionnaires returned were included in the analysis. In the questionnaire the elements of qualification and position held were the variables used for the characteristics of the respondents. Table 5.1 reflects the detailed position held by the respondents. The detailed positions held by the respondents may be classified according to management level: executive level, senior management level, middle management level. Following this classification, all directors, deputy directors and general directors are classified at the executive level. The president of the Republic of Côte D’Ivoire parliament was included in this category because, according to the Republic of Côte D’Ivoire constitution, he is a deputy president of the country. 65 5.2.1.1. Respondents employment position’s distribution Table 5.1: Respondents position’s distribution Position Frequency Percentage Administration 1 1.80% Administration & Amp; Financial Manager 1 1.80% Administration Director 1 1.80% Procurement Manager 1 1.80% Budget Director 2 3.50% Business Intelligence Manager 1 1.80% Deputy Director 12 21.10% Director General 10 17.50% Director 3 5.30% Corporate Director 1 1.80% (Source: Analysis of survey data from SPSS.) Table 5.1: Respondents positions distribution (cont’d) Economical Adviser 1 1.80% Executive Director 1 1.80% Export Agent 1 1.80% Financial Manager 6 10.50% General Manager 2 3.50% Head-Performance Management 1 1.80% Human Resource Director 1 1.80% Invoice Manager 1 1.80% Managing Director 1 1.80% Marketing Assistant 1 1.80% Political Counselor 1 1.80% President Director General 1 1.80% President of C.I parliament 1 1.80% Quality Manager 1 1.80% Representative 1 1.80% Sales Manager 1 1.80% Service Manager 2 3.50% Total 57 100.00% (Source: Analysis of survey data from SPSS) 66 All managers, such as service manager, financial manager, sales manager (Economic adviser and political counselor are included in this category), are classified at the senior management level. The remaining positions, such as export agent, administrative are classified at the middle management level. From this classification (Table 5.1.a refers) sixty percent (60%, n=34) of the respondents are at the executive level; thirty-two percent (32%, n=18) of the respondents are at the senior management level and the remaining eight percent (8%, n=5) are at the middle management level. For the purpose of this study, the questionnaire was sent to executive management level. The reasons given why the questionnaires were completed by the executives are that they are the most appropriate person with adequate knowledge on the most important FDI factors which had influenced their decisions of choosing Côte D’Ivoire, Sixty percent (60%, n=34) of the questionnaires were completed by respondents who held an executive position. It can then be concluded that most of the respondents are at the executive level. Table 5.1.a: Summary of distribution of position held Position held Frequency Percentage Executive 34 60 Senior manager 18 32 Middle manager 5 8 Total 57 100 (Source: Adapted from Table 5.1 of analysis of survey data.) In Figure 5.1 the proportion of the detailed position of the respondents is explained. The deputy directors, with 21.1% (n=12), are the highest respondents, followed by the directors general, with 17.5% (n=10). When added together the deputy directors and directors general alone accounted for 38.6% (n=22) of the overall respondents to the survey. 67 It is also important to note that deputy director and director general were classified at the executive level, which can confirm the assertion shown in Table 5.1a of most of the respondents being on the executive level. The third most respondents are financial managers, with 10.5% (n=6); the fourth most are directors, with 5.3% (n=3); followed by budget directors, general and service managers, which each accounted respectively 3.5% (n=2 for each category). The remaining respondents account for 1.8% (n=1). According to Figure 5.1, deputy directors and directors general, which are at the executive level, accounted for 38.6% (n=22) the largest portion of the survey respondents but they are followed by the financial managers which are at the senior manager level, which accounted for 10.5% (n=6). Which reveals that almost a third of the respondents are a combination of executive and senior manager levels, with a total of 49.1% (n=28). The directors with 5.3% (n=3), which are at the executive level, rank at the fourth position after financial manager. It can then be concluded that, when classifying the respondents according to executive, senior and middle management level, most of the respondents which completed the questionnaire are on the executive level, followed by senior manager; but when looking at them in detail, most of the respondents who completed the questionnaire are at the executive and senior manager level. 68 Figure 5.1: Detailed position distribution held by respondents (Source: Analysis of survey data) Republic of Côte D’Ivoire Table 5.2 above illustrates the qualification distribution of the respondents. 31.6% (n=18) of the respondents were economists, 14% (n=8) were accountants, while 8.8% (n=5) have an MBA. 3.5% (n=2 for each of them) of the respondents are geologists or mine and amp: geologist or financial accountant or had a Doctorate in Geology. 1.8% (n=1 for each) of the remaining have B-tech or human resource or management, master in GAE or were in management, Economics, communication, is an engineer or geologist: mine engineer, geologist engineer, geologist environmentalist, or macroeconomist It can be concluded from the above that most of the respondents were economists. However, 54.4% (n=31) of the respondents which had completed the questionnaire are economist, accountant and people with an MBA. 69 5.2.1.2 Qualification distribution of the respondents Table 5.2 Qualification distribution of Respondents Qualifications Frequency Percentage Accountant 8 14.00% B-Tech HR 1 1.80% B-Tech Management 1 1.80% Diplomat 1 1.80% Doctor in Geology 2 3.50% Economist 18 31.60% Electromechanical Engineering 1 1.80% Engineer 1 1.80% Finance 2 3.50% Financial Accountant 2 3.50% Geologist 2 3.50% Geologist & Amp; Mine Engineer 1 1.80% Geologist Engineer 1 1.80% Geologist Environmentalist 1 1.80% Macro-Economist 1 1.80% Master in Economy 1 1.80% Master in Communication 1 1.80% Master in GAE 1 1.80% Master in Management 1 1.80% Master in Management & Amp; Sciences 1 1.80% Master-Sales & Amp; Marketing 1 1.80% MBA 1 1.80% Mine & Amp; Geologist Engineer 5 8.80% Statistical Engineer 2 3.50% Total 57 100% (Source: Analysis of survey data) By grouping the respondents according to their qualifications or according to their general academic field, 5 classifications were extracted. Therefore, all accountants, finance, financial accountant, economist, macro-economist and Master in Economics were grouped under Economist/Finance. All geologists, geologist and amp, geologist environmentalist, master in geology were under Geologist; while Master in 70 Communication, B-Tech Management, MBA, Master in Management, master-sale and marketing were grouped under Management. B-Tech, Human Resource, and diplomat were under Human Resource; while Engineering, and Electromechanical were grouped under Engineer. Table 5.2.a provides the frequency distribution according to the above grouping. Table 5.2.a. Qualification Distribution of Grouped Respondents Code Qualification Frequency Percentage 1 Geologist 10 17.5 2 HR 2 3.5 3 Management 10 17.5 4 Economist/Finance 33 57.9 5 Engineer 2 3.5 57 100 Total (Source: Analysis of survey data) According to table 5.2.a. 17.5% (n=10) of the respondents were geologists, 3.5% (n=2) have a qualification in HR, 17.5% (n=10) have a qualification in management. At 57.9% (n=33) most of the respondents have a Economist/Finance qualification, while engineers accounted for 3.5% (n=2) of the respondents. It is important to notice that this study is related to the economy of Côte D’Ivoire and a high level of respondents (57.9%, n=33) which completed the survey had a qualification in Economics. Therefore, it can be assumed that most of the questionnaires were completed by respondents who were familiar with the research field. Also this result confirms the above analysis on the detailed qualification distribution of the respondents, where 54.4% (n=31) of the respondents are qualified as an economist, accountant or have an MBA. 71 5.2.2 Institution Characteristics Distribution 5.2.2.1 Type of institution distribution Table 5.3: Type of institution Distribution Type of Institution Frequency Percentage Construction 1 1.80% Government 9 15.80% Manufacture 14 24.60% Mining 10 17.50% Service 23 40.40% Total 57 100% (Source: Analysis of survey data) Of the 100 questionnaires sent out, 57 completed questionnaires were received back. Out of the completed questionnaires, it was indicated that 40.4% (n=23) of the respondents were from service companies, 24.6% (n=14) were from manufacturing companies, 17.5% (n=10) from mining companies, whereas the government accounted for 15.8% (n=9). The category of construction companies accounted for 1.8% (n=1) of the respondents. Again, it can be noted, most of the respondents of the survey were from foreign companies with 85.2% (n=48) ,specially from service companies with 40.4% (2=23). 5.2.3 Cross-Tabulation Distribution of Respondents and Institution Characteristics The study undertook cross-tabulation distributions to highlight more useful implications of how respondents responses were related to their positions and qualifications 72 5.2.3.1 Qualification and Position Distribution Table 5.4 Qualification and position cross tabulation distribution Position Qualification 1 2 3 4 5 Total 1 2 3 Total Count 9 1 0 10 % within qualification 90.0% 10.0% .0% 100.0% % within position 26.5% 5.3% .0% 17.5% Count 1 1 0 2 % within qualification 50.0% 50.0% .0% 100.0% % within position 2.9% 5.3% .0% 3.5% Count 5 3 2 10 % within qualification 50.0% 30.0% 20.0% 100.0% % within position 14.7% 15.8% 50% 17.5% Count 18 13 2 33 % within qualification 54.5% 39.4% 6.1% 100.0% % within position 52.9% 68.4% 50% 57.9% Count 1 1 0 2 % within qualification 50.0% 50.0% .0% 100.0% % within position 2.9% 5.3% .0% 3.5% Count 34 19 4 57 % within qualification 59.6% 33.3% 7.0% 100.0% % within position 100% 100% 100% 100% (Source: Analysis of survey data) According to Table 5.4 above: 9 of the respondents are executives and have a qualification as geologist, which represent respectively 26.5% within the executive and 90% within the geologist categories. Of the 2 Human Resource Management respondents, one (1) is an executive and one (1) at the senior management position, which represents 50% for each of them; while for the executive and senior management categories they account respectively for 2.9% and 5.3%. 73 Of the 5 executives accounted for 50% have a qualification in management; 3 fell into the senior management category, which represented 30%, and 2 fell into the middle management category, which represented 20%. But within their respective position they represent 14.7%; 15.8% and 50%. Out of the respondents, 18 are executives and economists; which accounted respectively 52.9 % and 54.5%; 13 are senior managers and economists, representing 68.4% and 39.4% respectfully. The last 2 categories are middle managers and economists, representing 50% and 6.1% respectfully. One respondent is both an executive and an engineer, which represents 2.9% among the executive respondents and 50% among engineers. Another respondent is a senior manager and an engineer, accounting for 5.3% of senior managers and 50% among engineers. Interpretation of Table 5.5: Of the geologist category, 7 respondents are from a mining company and 1 each is from government, manufacture and service, which represent 70%, 10%, 10% and 10% among the geologist and 70%; 11.1%; 7.1% and 4.3% respectively within the type of company. From the respondents in human resource management, 1 is from government and 1 from a service company, which represent 50% for each within their qualification and 11.1% and 4.3% respectively within their company. 7, 2 and 1 of the respondents are from service, manufacturing and government respectively and have management qualification, which account for 70%; 20% and 10% respectively among the qualifications and 30.4%; 14.3% and 11.1% respectively within their company. For respondents that have a qualification as economist, 12 are from service, 11 from manufacture, 6 from government, 3 from mining, and 1 from a construction company, which represents 36.4%, 33.3%, 18.2%, 9.1% and 3% respectively among respondents that fell into the economist category and 52.2%, 78.6%, 66.7%, 30% and 100% respectively among their type of company. 74 2 of the respondents from the engineer category and from the service company category, which represents 100% and 8.7% respectively. 5.2.3.2 Qualification and Type of Institution Distribution Table 5.5 Qualification and type of institution cross-tabulation distribution Type of institution Government Manufacture Mining Services 0 1 1 7 1 10 0.00% 10.00% 10.00% 70.0% 10.0% 100.% .0% 11.1% 7.1% 70% 4.3% 17.5% Count % within qualification % within type of company 0 1 0 0 1 2 0.00% 50.00% 0.00% 0.00% 50.0% 100.0% .0% 11.1% .0% .0% 4.3% 3.5% Count % within qualification % within type of company 0 1 2 0 7 10 0.00% 10.00% 20.00% 0.00% 70.0% 100.0% .0% 11.1% 14.3% .0% 30.4% 17.5% Count 1 6 11 3 12 33 3.00% 18.20% 33.30% 9.10% 36.4% 100.0% 100% 66.7% 78.6% 30.% 52.2% 57.9% Count % within qualification % within type of company 0 0 0 0 2 2 0.00% 0.00% 0.00% 0.00% 100.% 100.0% .0% .0% .0% .0% 8.7% 3.5% Count % within qualification 1 9 14 10 23 57 1.80% 15.80% 24.60% 17.5% 40.4% 100.0% 100% 100% 100% 100% 100% Count Qualification 1 % within qualification % within type of company 2 3 4 % within qualification % within type of company 5 Total % within type of company 100% (Source: Analysis of survey data) 75 Total Construction 5.2.3.3 Position and Type of Institution Distribution Table 5.6 Position and type of institution cross-tabulation distribution type of institution Construction Government Manufacture Mining Services 1 5 7 9 12 34 2.90% 14.70% 20.60% 26.5% 35.3% 100.0% 100% 55.6% 50% 90% 52.2% 59.6% 0 4 6 0 9 19 0.00% 21.10% 31.60% 0.00% 47.4% 100.0% % within type of company .0% 44.4% 42.9% .0% 39.1% 33.3% Count 0 0 1 1 2 4 % within position 0.00% 0.00% 25.00% 25.0% 50.0% 100.0% Count Position 1 % within position % within type of company 2 3 Total Total Count % within position % within type of company .0% .0% 7.1% 10% 8.7% 7% Count 1 9 14 10 23 57 % within position 1.80% 15.80% 24.60% 17.5% 40.4% 100.0% 100% 100% 100% 100% 100% % within type of company 100% (Source: Analysis of survey data) Interpretation of Table 5.6: From the respondents in an executive position 12 were from service, 9 from mining, 7 from manufacture, 5 from government and 1 from construction, representing 35.3%, 26.5%, 20.6%, 14.7%, and 2.9% respectfully; while within the type of company category they represent 52.2%; 90%; 50%; 55% and 100% respectively. 9 of the respondents were at the senior management position and were from a service company, representing 47.4% and 39.1% respectively. 6 of the respondents were in the senior manager and manufacture categories, which 76 corresponded to 31.6% and 42.6% respectively, while the rest of the respondents 4 are from government, which represented 44.4% within their company, and 21.1% within the senior manager category. Out of the 4 respondents from the middle manager category, 2 were from service, 1 from manufacture and 1 from mining, accounting for 50%, 25%, and 25% respectively within middle manager category and 8.7%, 7.1%, and 10% respectively among the type of company category 5.2.4 Relative Percentage Frequency Distribution Per Variable Table 5.7 Frequency of responses for the questionnaire (Q1-Q16) No Questions 1= 2= of little 1 promising performance of the C.I 3= 4= very Total unimportant importance important important - 1.8 52.6 45.6 100 8.8 49.1 42.1 100 economy 2 Growing local market 3 Cheaper input 5.3 24.6 50.9 19.3 100 4 Cheaper labour 1.8 22.8 57.9 17.5 100 5 Co-operation 1.8 22.8 43.9 31.6 100 behaviour of locally owned firms 6 Geographical location of C.I 5.3 17.5 22.8 54.4 100 7 Physical infrastructure - 10.5 59.6 29.8 100 8 Peaceful industrial relations 3.5 15.8 52.6 28.1 100 9 Investment incentives - 17.5 42.1 40.4 100 10 Educational standards 7.0 35.1 28.1 29.8 100 11 Financial infrastructure 3.5 21.1 47.4 28.1 100 12 Legal environment for investment and 1.8 15.8 36.8 45.6 100 5.3 15.8 50.9 28.1 100 business 13 Equal treatment with locally owned firms 14 Tariffs and quotas 7.0 28.1 45.6 19.3 100 15 Using C.I as an export base 3.5 15.8 45.6 35.1 100 16 High 1.8 17.5 49.1 31.6 100 expected rate of return in supplying primarily in C.I (Source: Analysis of the survey data) 77 The interpretation of Table 5.7 is as follows: Q1 “promising performance of the Côte D’Ivoire economy”, was expressed by 98.2% (n=56) of the respondents as important and very important determinant for their investment decision, while 1.8% (n=1) as regarded that as of little importance. Q2 “growing local market”, 91.2% (n=52) of the respondents considered it important and very important in their decision making, while 8.8% (n=5) considered it of little importance. Q3 “cheaper input” is important and very important for 70.2% (n=40) of the respondents. 29.8% (n=17) of the respondents perceived it as unimportant and of little importance. Q4 and Q5 respectively “cheaper labour” and “co-operation behavior of locally owned firms”, 75.4% (n=43) of the respondents had weighted them as important and very important, while 34.6% (n=14) weighted them as unimportant and of little importance. Q6 “geographical location of Côte D’Ivoire, 54.4% (n=31) of the respondents see it as very important in their decision making. For 22.8% (n=13) of the respondents it is unimportant and of little importance, while for 77.2% (n=44) it is important and very important. Q7 “physical infrastructure”, for 89.5% (n=51) of the respondents it is important and very important, whereas for 10.5% (n=6) it is of little importance. Q8 “peaceful industrial relations”, 80.7% (n=46) of the respondents perceive it as important and very important, while 29.3% (n=11) perceive that as unimportant and of little importance. For Q9 “investment incentives”, 82.5% (n=47) of the respondents weighted it as important and very important, only 17.5% (n=10) weighted that of little importance. Q10 “educational standards”, is of little importance for 35.1% (n=20) of the respondents, but important and very important for 57.9% (n=33). Only 42.1% (n=24) see it as of little importance and unimportant. 78 Q11 “financial infrastructure”, 75.5% (n=43) of the respondents perceive that as important and very important, only 24.5% (n=14) perceive that as of little importance and 3.5% (n=2) see it as unimportant. Q12 “legal environment for investment and business”, 72.4% (n=47) of the respondents weighted it as important and very important, while 27.6% (n=10) weighted it as being of little importance and unimportant. Q13 “equal treatment with locally owned firms”, 80% (n=45) of the respondents consider it as important and very important, only 20% (n=12) consider it as of little important and unimportant. Q14 “tariffs and quotas”, for 64.9% (n=37) it is important and very important, whereas for 35.1% (n=20) it is of little importance and unimportant. For Q15 and Q16 respectively “using Côte D’Ivoire as an export base and “high expected rate of return in supplying primarily in Côte D’Ivoire, 80.7% (n=46) of the respondents considered them as important and very important, while 19.3% of the respondents had considered them as of little importance and unimportant. In summary, questions: Q1 (98.2%, n=56), Q2 (91.2%, n=52), Q7 (89.5%, n=51), Q9 (82.5%, n=47), [Q8, Q15 and Q16 (80.7%, n=46)], and Q13 (80%, n=45) were considered important and very important by most respondents. Therefore, it can be assumed that those variables play a major role and can be viewed as the most important factors affecting respondents’ investment decisions. 5.2.5 Cross-Tabulation (Characteristics of the Respondents and Variables) 5.2.5.1. Qualification and Variables The frequency distribution of the respondents’ qualification analysis shows that 57.9% (n=33) of the respondents had an Economical academic background. The variable that they considered most important as an investment influencers will be focused on next. From the analysis (Table 5.8 refers), Q1, Q7, and Q2 are indicated as being the three most important aspects, with 56.2% (n=32), 52.6% (n=30), and 79 50.9% (n=29) respectively. In addition, out of the 33 economist respondents 32 (which represented 56.2% of the respondents) answered Q1 as important and very important. 30 of them had answered Q2 and 29 for Q3 which represent 52.6% and 50.9% respectively. Q6 and Q8 were answered with the same proportion as important and very important by economists (representing 49.1%, n=28). 27 (representing 47.4%) answered Q15 and Q16 as important and very important. Table 5.8 Cross tabulation for qualification and variables (Q1 and Q2) Q1 Qualification 1 2 3 4 0 7 3 Total 0.00% 12.30% Count 0 Total Count 4 10 1 4 5 10 5.30% 17.50% 1.80% 7.00% 8.80% 17.50% 2 0 2 0 2 0 2 0.00% 3.50% 0.00% 3.50% 0.00% 3.50% 0.00% 3.50% 0 4 6 10 0 5 5 10 Total 0.00% 7.00% 10.50% 17.50% 0.00% 8.80% 8.80% 17.50% Count 1 16 16 33 4 16 13 33 Total 1.80% 28.10% 28.10% 57.90% 7.00% 28.10% 22.80% 57.90% Count 0 1 1 2 0 1 1 2 Total 0.00% 1.80% 1.80% 3.50% 0.00% 1.80% 1.80% 3.50% Count 1 30 26 57 5 28 24 57 1.80% 52.60% 45.60% 100.00% 8.80% 49.10% 42.10% 100.00% Count % 4 % 5 % Total % of of of of of of Total (Source: Analysis of survey data) 80 Total 3 % 3 Q2 2 % 2 Total 5.2.5.2 Position and Variables 59.6% (n=34) of the respondents were from the executive category. Analyzing their responses revealed the following: Of the 34 executives, all of them answered Q1 as important and very important, which indicated a 59.6% response. 32 executives answered Q2 and Q7 as important and very important, which represented a 56.1% response. 29 executives answered Q9, Q11, Q12, Q15 and Q16 as important and very important, corresponding to a response of 50.9%. (Table 5.9 refers). Table 5.9 Cross tabulation of positions and variables (Q1, Q2 & Q7) Q1 Position 1 2 3 4 0 21 13 Total 0.00% 36.80% Count 1 Total Count 4 34 2 17 15 34 22.80% 59.60% 3.50% 29.80% 26.30% 59.60% 8 10 19 2 9 8 19 1.80% 14.00% 17.50% 33.30% 3.50% 15.80% 14.00% 33.30% 0 1 3 4 1 2 1 4 Total 0.00% 1.80% 5.30% 7.00% 1.80% 3.50% 1.80% 7.00% Count 1 30 26 57 5 28 24 57 1.80% 52.60% 45.60% 100.00% 8.80% 49.10% 42.10% 100.00% Count % Total Total 3 % 3 Q2&Q7 2 % 2 Total % Total of of of of (Source: Analysis of survey data) 5.2.5.3 Type of Institution and Variables From the frequency distribution of type of company category, 40.4% (n=23) of the respondents were from service companies. Table 5.10 shows that, of 23 respondents, 22 responses from Q1 were completed by service companies and they all answered Q1 as important and very important, which represented 38.6% of the response. 21 of the responses for Q7 were respondents from the service category and all 21 agreed that Q7 is important and very important, which accounted for 36.9% of the responses. Q2, Q13, and Q15 each received an answer of important and very important, which 81 accounted for a response rate of 35%; the respondents were from 20 service companies. Table 5.10 Cross tabulation for type of institution and variables (Q1and Q2) Q1 type institution 2 3 4 0 0 1 0.00 0.00 1.80 % % % 0 6 0.00 Q2 Total 2 3 4 0 1 0 0.00 1.80 0.00 1.80% % % % 1.80% 3 9 0 5 4 9 10.50 5.30 15.80 0.00 8.80 7.00 15.80 % % % % % % % % 0 6 8 14 0 7 7 14 0.00 10.50 14.00 24.60 0.00 12.30 12.30 24.60 % % % % % % % % 0 7 3 10 2 5 3 10 0.00 12.30 5.30 17.50 3.50 8.80 5.30 17.50 % % % % % % % % 1 11 11 23 3 10 10 23 1.80 19.30 19.30 40.40 5.30 17.50 17.50 40.40 Total % % % % % % % % Count 1 30 26 57 5 28 24 57 1.80 52.60 45.60 100.00 8.80 49.10 42.10 100.00 % % % % % % % % of 1 Count % of Total 2 Count % of Total 3 Count % of Total 4 Count % of Total 5 Count % Total Total % Total of of 1 1 N.B: 1= unimportant; 2= of little importance; 3=important; 4=very important on Table 5.7. (Source: Analysis of survey data) 82 5.3 Inferential Statistics 5.3.1 Reliability Test (Cronbach Alpha Test) According to Andy (2005:673-674), Cronbach (1951) came up with a measure that is loosely equivalent to splitting data in two in every possible way, to compute the correlation coefficient for each split. The average of these values is equivalent to Cronbach’s alpha, α, which is the most common measure of the scale reliability. Furthermore, he noticed that: “although the generally accepted value of 0.8 is appropriate for cognitive tests such as intelligence tests, for ability tests a cut-off point of 0.7 is more suitable”. Table 5.11 describes Cronbach’s α for the survey instrument. Table 5.11 Cronbach’s Alpha for the survey instrument. Cronbach’s Alpha N of Item .801 16 (Source: Analysis of survey data) The Cronbach’s Alpha (α) for the instrument is 0.801. The reliability analysis is greater than 0.7, which indicates the internal consistency of the instrument. 83 5.3.1.1 Reliability Test for Variables Table 5.12 Cronbach’s Alpha for each variable (Q1-Q16) Cronbach's Alpha Q1 0.801 Q2 0.799 Q3 0.781 Q4 0.778 Q5 0.789 Q6 0.817 Q7 0.794 Q8 0.799 Q9 0.778 Q10 0.8 Q11 0.781 Q12 0.774 Q13 0.782 Q14 0.795 Q15 0.784 Q16 0.798 (Source: Analysis of survey data) As can be seen from Table 5.12, all the variables have Alpha (α) greater than 0.7; variables Q1, Q6, and Q10 have Alpha (α) greater than 0.8. The reliability analysis for each is thus acceptable, therefore, the variables are consistent. 5.3.2 Chi-Square Tests 5.3.2.1 Characteristics of Respondents 5.3.2.1.1 Chi-Square Tests for Qualification and Position Table 5.13 Chi-square tests for qualifications and positions Pearson Chi-Square X2 Df P 7.698 8 0.464 (Source: Analysis of survey data) 84 As can be seen from Table 5.12, X2 = 7.698, df=8, and P value= 0.464 P= 0.464>0.05 the qualification and position of the respondents of this study are not related. 5.3.2.1.2 Chi-Square Tests for Qualification and Type of Institution Table 5.14 Chi-square tests for qualifications and type of institution Pearson Chi-Square X2 Df P 31.92 16 0.01 P = 0.01<0.05; the respondents qualification and type of institution are related. (Source: Analysis of survey data) 5.3.2.1.3 Chi-Square Tests for Position and Type of Institution Table 5.15 Chi-square tests for the respondents’ positions and type of institution Pearson Chi-Square X2 Df P 7.811 8 0.452 P = 0.452>0.05. The respondents’ position and type of institution are not related. (Source: Analysis of survey data) As can be seen from Table 5.16, for Q1-Q14 and Q16, the P values are > 0.05. The position of the respondents and variables Q1-Q14 and Q16 are not related. For variable Q15, P=0.02<0.05, then Q15 “Using Côte D’Ivoire as an export base” is related to a respondents position. 85 5.3.2.2 Characteristics of Respondents and Variables 5.3.2.2.1 Chi-Square Tests for Respondents’ Position and Variables Table 5.16 Chi-square tests for positions and variables (Q1-Q16) POSITION Questions Pearson Chi-Square X2 Df P Q1 4.887 4 0.299 Q2 1.92 4 0.751 Q3 7.704 6 0.261 Q4 6.307 6 0.39 Q5 6.937 6 0.327 Q6 7.149 6 0.307 Q7 5.189 4 0.268 Q8 4.001 6 0.677 Q9 7.13 4 0.129 Q10 5.415 6 0.492 Q11 6.696 6 0.35 Q12 6.76 6 0.344 Q13 3.754 6 0.71 Q14 0.77 6 0.993 Q15 15.037 6 0.02 Q16 4.87 (Source: Analysis of survey data) 6 0.561 As can seen from Table 5.17, variables Q1-Q9 and Q11-Q15, all have a P value>0.05; which indicates the variables and respondents’ qualification are not related. Q10 and Q16 have P values of 0.048 and 0.000 respectively. The P values for Q10 and Q16< 0.05; which means Q10 and Q16 are related to the respondents’ qualification. 86 5.3.2.2.2 Chi-Square Tests for Respondents’ Qualification and Variables Table 5.17 Chi-square tests for qualifications and variables ( Q1-Q16) QUALIFICATION Questions Pearson Chi-Square X2 Df P Q1 4.535 8 0.806 Q2 4.121 8 0.846 Q3 12.764 12 0.386 Q4 12.908 12 0.376 Q5 17.443 12 0.134 Q6 17.777 12 0.123 Q7 11.766 8 0.162 Q8 13.039 12 0.366 Q9 7.266 8 0.508 Q10 21.133 12 0.048 Q11 12.749 12 0.388 Q12 5.326 12 0.946 Q13 9.172 12 0.688 Q14 11.467 12 0.489 Q15 11.333 12 0.501 Q16 38.656 (Source: Analysis of survey data) 12 0.000 87 5.3.2.2.3 Chi-Square Tests for Respondents’ Type of Institution and Variables Table 5.18 Chi-square tests for type of institution and variables (Q1-Q16) TYPE OF INSTITUTION Questions Pearson Chi-Square X2 Df P Q1 5.183 8 0.738 Q2 5.775 8 0.672 Q3 29.324 12 0.004 Q4 10.102 12 0.607 Q5 7.884 12 0.794 Q6 24.821 12 0.016 Q7 10.233 8 0.249 Q8 13.488 12 0.335 Q9 8.386 8 0.397 Q10 8.439 12 0.75 Q11 9.366 12 0.671 Q12 9.366 12 0.671 Q13 15.873 12 0.197 Q14 9.980 12 0.618 Q15 37.118 12 0.00 Q16 11.111 (Source: Analysis of survey data) 12 0.519 As can be seen from Table 5.18, variables Q1-Q2, Q4-Q5, Q7-Q14, and Q16 all have a P value >0.05; meaning the type of institution and those variables are not related. For variables Q3, Q6, and Q15 the P value is 0.004, 0.016, and 0.00 respectively. With P values for Q3, Q6, and Q15<0.005, then the variables for Q3, Q6, and Q15 are related to the respondents’ type of institution. 88 5.4 Correlation 5.4.1 Correlation Matrix for Variables Table 5.19 Correlation matrix for variables Correlation Q1 Q2 Q3 Q4 0.3 Q5 0.0 98 Q6 0.0 56 Q7 0.0 45 Q1 1 0.35 0.0 4 Q2 0.35 1 Q3 0.04 Q4 0.3 0.09 8 0.05 6 0.04 5 0 0.3 53 0.0 71 0.0 6 0.0 15 0.0 73 0.1 47 0 1 0.5 6 0.4 11 0.2 72 0.1 74 0.2 48 0.35 3 0.5 6 1 0.3 7 0.1 47 0.3 38 0.1 44 0.07 1 0.4 11 0.3 7 1 0.0 53 0.1 64 0.06 0.2 72 0.1 47 0.0 53 1 0.0 35 0.1 73 0.1 69 0.1 74 0.3 38 0.1 64 1 0.2 83 Q9 0.07 3 0.19 6 0.01 5 0.14 7 0.25 6 0.2 48 0.1 85 0.1 44 0.3 59 0.1 73 0.2 57 0.2 83 0.2 99 1 0.3 28 Q10 0.13 4 0.10 8 0.0 53 0.1 64 0.1 33 0.3 72 0.2 83 Q11 0 0.07 0.3 07 0.2 91 0.3 95 Q12 0.39 7 0.3 5 0.5 02 Q13 0.10 5 0.31 9 0.01 2 0.4 45 0.14 4 Q15 0.10 7 0.04 4 Q16 0.32 9 Q5 Q6 Q7 Q8 Q14 89 0.0 35 0.1 69 0.0 41 0.2 62 Q8 0.4 01 0.1 74 0.3 78 0.1 19 0.0 95 0.1 52 0.1 83 0.2 9 0.3 89 0.0 41 0.1 37 0.2 57 0.3 17 0.2 1 0.2 59 0.0 55 0.0 52 0.0 46 0.23 3 0.4 21 0.3 43 0.1 18 0.2 26 0.5 98 0.0 66 0.2 42 0.0 06 0.0 18 0.41 3 0.2 71 0.0 4 0.3 33 Q9 0. 19 6 0. 25 6 0. 18 5 0. 35 9 0. 25 7 0. 04 1 0. 29 9 0. 32 8 1 0. 42 2 0. 39 5 0. 44 9 0. 32 3 0. 17 2 0. 28 5 0. 41 2 Q10 Q11 Q12 Q13 Q14 Q15 Q16 0.13 4 0 0.39 7 0.105 0.10 7 0.044 0.329 0.10 8 0.07 0.31 9 -0.012 0.14 4 0.233 0.413 0.05 3 0.30 7 0.35 0.445 0.31 7 0.421 0.118 0.16 4 0.29 1 0.50 2 0.29 0.21 0.343 0.226 0.13 3 0.26 2 0.39 5 0.37 8 0.389 0.25 9 0.271 -0.04 0.11 9 -0.1 0.041 0.05 5 0.598 0.066 0.37 2 0.40 1 0.15 2 0.137 0.05 2 0.242 0.006 0.28 3 0.42 2 0.17 4 0.39 5 0.18 3 0.44 9 0.018 0.333 0.285 0.412 1 0.30 4 0.30 4 0.323 0.04 6 0.17 2 0.25 8 0.12 0.12 2 0.148 0.154 1 0.59 1 0.411 0.18 4 0.333 0 0.25 8 0.59 1 1 0.576 0.30 5 0.229 0.194 0.12 0.41 1 0.57 6 1 0.31 8 0.325 0.114 0.12 2 0.18 4 0.30 5 0.318 1 0.147 0.18 0.14 8 0.33 3 0.22 9 0.325 0.14 7 1 0.038 0.15 4 0 0.19 4 0.114 0.18 0.038 1 0.257 As can be seen from Table 5.20, the variables (Q6 & Q15), ( Q12 & Q11), (Q12 & Q13), (Q3 & Q4), (Q4 & Q12), (Q9 & Q12), (Q3 & Q13), and (Q2 & Q16) respectively have the following correlation values 0.598; 0.591; 0.576; 0.56; 0.502; 0.449; 0.445 and 0.413; meaning that there is a strong correlation between them. 5.5. Factor Analysis 5.5.1 KMO and Bartlett’s Test Table 5.20 KMO and Bartlett’s Test Kaiser-Meyer-Olkin Measure of .691 Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square (X2) 306.703 Df 120 P value .000 For the KMO test, a KMO minimum or acceptable value is 0.5. If KMO is less than 0.5 (KMO<0.5) then the correlation is meaningless but if KMO>0.5 then it’s acceptable. In this study, KMO = 0.691>0.5 which is greater than 0.5. Therefore, it may be concluded that there is a strong correlation between the factors and that the factor analysis is good and valid. For Bartlett’s test, a P value<0.05 is acceptable and a P value>0.05 is not acceptable. In this study P= 0.000<0.05; therefore, the Bartlett’s test is acceptable. 90 5.5.2 Principal Component Analysis Table 5.21 Principal component analysis of variables Component 1 2 3 Q1 0.725 Q2 0.815 Q3 0.651 Q4 0.463 Q5 0.671 Q6 4 5 0.885 Q7 0.754 Q8 0.804 Q9 0.554 Q10 0.742 Q11 0.597 Q12 0.717 Q13 0.771 Q14 0.554 Q15 Q16 0.791 0.632 (Source: Analysis of survey data) On the factor analysis result, five (5) components were extracted and can be classified as follows: Component 1: Q3 “cheaper input”; Q4 “cheaper labor”; Q5 “level of cooperation with locally owned firms”; Q12 “legal environment for investment and business”; Q13 “equal treatment between locally owned firms and foreign companies” and Q14 “tariffs and quotas” are all aspects concerned with legislation; factor 1 measures the country’s legislation as a determinant of FDI. Component 2: Q7 “physical infrastructure”; Q9 “investment incentives”; Q10 “educational systems” and Q11 “financial infrastructure” are concerned with 91 infrastructure and education standard; factor 2 measures: infrastructure and human resource/capital as a determinant of FDI. Component 3: Q1 “promising performance of Côte D’Ivoire economy” and Q2 “growing local market” are related to the economy; factor 3 measures: the macroEconomic environment/indicator as a determinant of FDI. Component 4: Q6 “geographical location of Côte D’Ivoire” and Q15 “using Côte D’Ivoire as an export base” are related to a country’s position/physical location; factor 4 measures: geographical position as a determinant of FDI. Component 5: Q8 “peaceful industrial relations” and Q16 “high expected rate of return in supplying primarily in Côte D’Ivoire are concerned about labor environment”; factor 5 measures: labor law as a determinant of FDI. 5.5.2.1 Variables Mean Rankings Table 5.22 Mean ratings for variables (Q1-Q16) Mean Ratings For All Items Q1 Q2 Q6 Q12 Q9 Q7 Q15 Q16 Q5 Q8 Q13 Q11 Q4 Q3 Q10 Q14 92 N 3.44 3.33 3.26 3.26 3.23 3.19 3.12 3.11 3.05 3.05 3.02 3 2.91 2.84 2.81 2.77 As can be seen from Table 5.22, the top five (5) variables, such as Q1 “promising performance of the Côte D’Ivoire economy”, Q2 “growing local market”, Q6 “geographical location of Côte D’Ivoire”, Q12 “legal environment for investment and business”, and Q9 “investment incentives” scored the highest means from 3.44, 3.33, 3.26, and 3.23 respectively; whereas the variables Q11 “financial infrastructure”, Q4 “cheaper labor”, Q3 “cheaper input”, Q10 “educational systems”, and Q14 “tariffs and quotas” scored the lowest from 3, 2.91, 2.84, 2.81, and 2.77 respectively. 5.5.2.2 Mean Ratings for Components Table 5.23 Mean ratings for components or factors Factors Mean Ratings For Components Mean 1. Country Legislation as a determinant for FDI Q12 3.26 Q5 3.05 Q13 3.02 Q4 2.91 Q3 2.84 Q14 2.77 Average 2.98 Q9 3.23 Q7 3.19 Q11 3 Q10 2.81 Average 3.06 Q1 3.44 Q2 3.33 Average 3.39 Q6 3.26 Q15 3.12 Average 3.19 Q8 3.05 Q16 3.11 Average 3.11 2. Infrastructures and Human Resource/Capital 3. The Macro Economic Environment/indicator 4. 5. Geographical position/location Labor Law (Source: Analysis of survey data) 93 As can be seen from Table 5.23, factor 3 (Macro Economic Environment/Indicator as determinant of FDI in Côte D’Ivoire) scored the highest average mean of 3.39, followed by factor 4 (Geographical position/location as determinant of FDI) with a mean of 3.19, followed by factor 5 (labor law as determinant of FDI), with a mean of 3.11, followed by factor 2 (infrastructure and human resources/ capital as determinant of FDI), with a mean of 3.06, and finally, factor 1 (country legislation as determinant of FDI), with a mean of 2.98.Table 5.23 is summarized in Table 5.23a. Table 5.23a Summary of the mean ratings for the factors Factor Mean The Macro Economic Environment/indicator 3.39 Geographical position/location 3.19 Labor Law 3.11 Infrastructures and Human Resource/Capital 3.06 Country Legislation as a determinant for Foreign Direct Investment 2.98 (Source: Analysis of survey data) 5.6 Conclusion Chapter 5 focused on the presentation of the survey data resulting in the form of descriptive and inferential statistical analysis. This chapter, however, has only provided a contextual description of the results of the analysis. In Chapter 6 the findings, recommendations and conclusion about the research will then be discussed. 94 CHAPTER 6 FINDINGS AND CONCLUSIONS 6.1 Introduction In this chapter, the findings of the study are presented and discussed in relation to the findings presented in the literature review (see Chapter 2). Conclusions about answers to the research questions, problems and objectives are made. Recommendations, the limitations and implications for further research are also presented. 6.2 Findings and Discussions The results of the data analysis (see Chapter 5) were based on feedback provided by 57 respondents; great care was taken to ensure that the individual or respondent who participated in this survey study was a key decision maker within his/her firm. Prior to presenting the findings and discussions related to each question, an analysis of the respondents’ and their company characteristics is first presented. 6.2.1 Respondents and Institution Characteristics Findings and Discussions The findings revealed that 57.9% (n=33) of the respondents of this research survey were economists or had a financial background, which strengthened this study as they were individuals who already possessed integral knowledge of the subject understudy, on the one hand, and, on the other, they were thus able to provide the right and meaningful information. Among the economists, 54.5% (n=18) were also executives and 36.4% (n=12) of the economists worked for a service company, which represent 52.2% (n=12) within that sector. Another finding was that 59.6% (n=34) of the respondents were on the executive level; meaning that this survey study was conducted largely using input from individuals on the top management level, where the key decision makers of each firm can be found. Further, the result of the analysis also revealed that more than 50% of all qualifications were executive in nature. For example, 90% (n=9) of the geologists are executives; 50% (n=1,2,5) of the engineers, 95 human resource and management are executives. Also, 52.2% (n=12) of the executive respondents worked for service companies, some as an economist. As already stated, care was taken to ensure that the respondents of the survey study was a key player (or at least participated) in each firm’s investment decision making processes. Another finding was that respondent qualification and type of company they were employed by were related. For example, 70% (n=7) of the geologists worked for a mining company; and 100% (n=2) of the engineers worked for a service company. And finally, the last finding with regard to this part was that 40.4% (n=23) the respondents were employed within a service company, which is a confirmation of the Côte D’Ivoire Center and Promotion Data (see Table 2.5) where the service sector (tourism, telecommunication, to name just two) in general accounted for more than 40% of the total FDI inflows for the period 1996-2008. That reveals the accuracy of this survey study and the most important investment sector in Côte D’Ivoire 6.2.2 Questionnaire Findings and Discussions The respondents were requested to indicate the importance of each factor (Q1 up to Q16) (whether more strongly or less) in their investment decision making processes. The findings and discussion on each is presented below: • For Q1 “promising performance of the Côte D’Ivoire economy” , 98.2% (n=56) of the respondents considered Q1 as an important determinants in their investment decision process. In addition, with 3.44 for the mean ratings, the highest for the top five mean ratings reveal the importance of this determinant for investors. For this reason, Loree and Guisinger (1995), Audrey et al. (2003:199, cited in Friedman et al. (1992)), and Billington (1999) state that: “Economic factors, such as inflation, and particularly tax rates and the tax structure of the host economy, are key investment considerations”. Added to that, Marios (2001:13-14) found that: “foreign investors are primarily concerned with a stable Macroeconomic together with credibility of policy reforms… the overall growth prospects buttressed with a liberalized exchange rate and a fully convertible currency, low inflation and stringent 96 fiscal management were the most widely perceived strengths of Uganda as an investment location”. The significance of this determinant for most survey respondents in this study could be attributed to the fact that Côte D’Ivoire has for the last four decades presented a good Economic stability record and, as an Economic engine for ECOWAS, plays a huge role in the area. • Q2 “growing local market” Here also, 91.2% (n=52) of the respondents stated that the growth within the local market played an important role as a determinant in their investment decision processes. Their argument is supported by the mean ratings where this determinant scored 3.33, after Q1. This is in line with other studies that find a growing local market (market size) as being a key determinant for investors. For Marios (2001:14), the market size (in terms of GDP per capita or size of the population or growth rate) is significant in affecting decisions on location. Thus, larger economies have attracted the bulk of FDI because of the potential for local sales. In small economies FDI usually concentrates on production for export. Audrey et al. (2003:198, cited in Kobrin (1979)), Yamawakai (1993), and Billington (1999) supported the view that the size of the foreign market and its potential growth are regarded as key factors influencing investors’ choice of location. Added to that, Ana (1997) states that: “econometric studies comparing a cross section of countries indicate a wellestablished correlation between FDI and the size of the market in terms of GDP, average income levels and growth rates”. He also found that over the last 25 years FDI in low-income countries has been highly concentrated in three countries, China, Nigeria and India. Large market size, low labor costs and high returns in natural resources were amongst the major determinants in the decision to invest in those countries. For Côte D’Ivoire, the fact that the population grew from 16 million in 2000 to 20 million in 2010 and an acceptable GDP growth rate performance from 2000-2010, despite the crisis, and also the account of its market share within the WAEMU market of 240 million, could explain the importance that investors assign to Côte D’Ivoire’s growing local market as being a determinant in their investment decisions. 97 • Q3 “cheaper input” Kasahara and Lapham, (2008, quoted by Emanuele, 2009) argue that cheaper and greater varieties of inputs increase productivity of the firms and consequently their capacity to compete on International markets. Supporting Emanuele, Wilbur (2001:13) states that: “greater demand for inputs increases incumbent costs. Incumbents face higher costs, but those are not high enough to warrant them relocating. In contrast, some multinationals choose less crowded locations with lower associated costs. While these lower costs do allow them to set lower prices, incumbents have to meet higher transport costs as these lower cost locations are likely to be a greater distance from established industry. Turning to the findings of this study, 70% (n=40) of the respondents saw this determinant as important in their investment decision processes. Out of those respondents, cheaper input as a determinant seems to have greater importance for service and manufacturing companies, which accounted for 50.1%. This can be explained by the fact that they are using intensive inputs in their production. Therefore, the Emanuele and Wilbur’s explanation indicated above is consistent with the findings of this study with regard to this determinant. Added to that, this determinant showed a strong correlation in the findings of this study with each respondent’s type of company; which strongly reinforces the explanation that the respondents put great emphasis on this component during their specific location investment decision process. • Q4 “cheaper labor” The result of empirical studies exploring the impact of cheaper labour as a determinant for a FDI location decision led to a mixed conclusion. Some, such as Cushman (1987), Wheeler and Mody (1992), and Marios (2001) found a positive effect of cheaper labour on FDI location decisions, while Schneider and Frey (1995), who conducted studies on the Economic and political determinants of FDI, found a negative effect of cheaper labour. Researchers, such as Loree and Guisinger (1995), in their study of policy and non-policy determinants of US equity on FDI, found no significant effect between low labour cost and FDI decision making. In this study despite 75% (n=43) of the respondents finding it important in their investment 98 decision processes, this determinant was part of the five lowest mean ratings with 2.91. This means that investors will welcome a location which offers lower or cheaper labour but, within the rating of the most important determinant for investment, this determinant is not really part of their top five in priority. This is consistent with Marios (2001:19), when he said: “relative costs influence location decisions, but low direct labor costs are not of as much importance as is commonly believed. In fact, the importance of low-cost unskilled labor in location decisions has declined in recent years and greater emphasis is now placed on skills and the trainability of workers.” The explanation of Chien-Hsun (1996:24, quoted by Cushman, 1987) provides a motivation for FDI, as the investing companies would benefit from the lower production costs presented by the host country and the trainability of the local population. • Q5 “level of cooperation with locally owned firms” 75% (n=43) of the respondents would enjoy cooperating with locally owned firms and have considered this determinant as important in their investment decision processes. The explanation of this finding can be as follow: (1) Investors may want to know the business environment in term of culture, inter-industry trade, exchange of information. (2) Investors may want to know of local opportunities. (3) Investors may want to gain experience through locally owned firms. (4) Investors may want to network. All the above can explain why it is important to cooperate with locally owned firms but, for the purpose of this study, the researcher was of the view that knowing or controlling the culture of the host country through cooperation with locally owned firms may be the chief purpose. For this reason, culture, ethics and entry mode to the new market, environmental aspects and consideration, implementation of change regarding home management or marketing practices may all be considered important to the decision process. All these aspects are challenges associated with FDI and, if not managed carefully, will result in loss for the home country and lack of development for host country (Hill, 2007:268-276). Another explanation from 99 Krishna and Derrick (1995:4) is that internal uncertainty is perceived by a firm as lack of market-related knowledge in a particular entry situation. Internal uncertainty can arise from the firm’s lack of experience in International markets or from cultural distance between the firm’s home country and host country. For example, he quotes Anderson and Gatignon, (1986) when he emphasises the importance of the differences between the countries’ cultures, languages and business practices. For this study, the above explanations are consistent with why most of the respondents considered this determinant as being important for their investment decision processes. • Q6 “geographical location of Côte D’Ivoire” This study found that 77.2% (n=44) of the survey respondents saw Côte D’Ivoire’s location as very important for them. For most of the respondents, the geographical location of Côte D’Ivoire was a major determinant in their decision to invest there. This is supported by another finding; the mean rating of this determinant was 3.26, the third of the top five mean ratings of the survey instrument. Added to that, was the finding that the geographical location of Côte D’Ivoire and the type of company the respondents came from were related. Another reason why this determinant is regarded by the respondents as the third most important determinant could be the fact that Côte D’Ivoire serves as an export/import base for the land locked countries, such as Mali and Burkina Faso. Added to that, as explained in Chapter 2, Côte D’Ivoire is located in west Africa and shares its border with the republic of Ghana (to the east), Burkina Faso and Mali (to the north), Liberia and Guinea Conakry (to the west). To the South the country is bordered by the Atlantic Ocean by 550 km of coast line. This could also explain why investors assigned importance to this determinant. Another explanation can be based on the firm’s strategy. If the objective of the firm is to access a specific region or sub-region market, then the firm has to select the country which offers the best geographical position to pursue its strategy. This is consistent with Dunning (1993:56-62) and Kiyoyasu (2009:4), FDIs that are undertaken to strengthen the existing market structure or explore the opportunities of new markets can be called “market-seeking FDIs”. 100 • Q7 “physical infrastructure” Various studies have pointed out the importance of physical infrastructure, called “quality of life” by Audrey et al. (2003:201) when he was referring to expenditure on roads, transport and hospitals. According to the findings of Chien-Hsun (1996), Marios (2001), Elizabeth Aiedu (2002), Audrey et al. (2003), and Junjie (2008), physical infrastructure plays a major role in FDI attraction. The findings of this study are consistent with the above research but also with the researcher’s expectation. 80.4% (n=51) of the survey respondents indicated the great importance that physical infrastructure plays in their investment decision processes; however, this determinant is still not part of the top five mean ratings. This could be explained by the fact that Côte D’Ivoire already has the physical infrastructure in place. • Q8 “peaceful industrial relations” 70.7% (n=46) of the respondents want a peaceful industrial relations environment for their investments. The findings of this study conclude that 12 of 14 respondents and 19 of 23 respondents were, respectively, from manufacturing and service companies, representing 55.1% of the total and most of them considered a peaceful industrial relations environment as being important in their investment decision processes. The explanation may be that they want a peaceful business environment for efficient and effective operations or production, as a non-peaceful industrial relations may have a negative impact on their production, therefore affecting their profit. • Q9 “investment incentives” The findings of this determinant confirmed the researcher’s prediction. 82.5% (n=47) of the respondents considered investment incentives as highly important in their investment decision process. This determinant was found in the top five mean ratings, with a mean of 3.23. This implies that out of the important factors which can determine a respondents ability to invest in Côte D’Ivoire, investment incentives is the fifth one. Many studies, including Miria (2001, Alvin et al. (2002), and Recep (2009), have found that competition among governments to attract FDI has grown 101 significantly. Many countries have not only reduced or eliminated such restrictions but have also moved toward encouraging FDI, through tax and other incentives. With regard to this study, Côte D’Ivoire Center of Promotion (CEPICI) - an investment agency under the supervision of the prime minister - offers investment incentives under the Côte D’Ivoire investment code. There are a range of incentives available according to the level of investment, area of investment and investment sector. Tax reduction or tax-free, repatriation of dividends for a specific period are a few incentives that investors can get from the investment code. In the new FDI climate this determinant does have important considerations for investors, since it allows them to save on the capital invested through a tax allowance from the host country but also to draw back the capital within a certain period of time. This could explain why, according to this study, most of the respondents have assigned high importance to this determinant. • Q10 “educational systems” To avoid confusion it is important to notice that cheaper or low labour is not a same as educational systems. By educational systems the intention is to focus on the sum total of all education systems through which highly qualified or skilled workers are delivered as output. 58% (n=33) of the respondents considered education systems as important but in terms of mean ratings, with a mean of 2.81, it falls within the bottom five. This indicates that the educational system is not, when considered by investors in their decision making processes, that important. Currently Côte D’Ivoire has one of the better education systems in the Africa sub-region. Investors can have access to locally qualified and skilled workers, which in terms of productivity and savings is to their benefit (cost saving for training and expatriation of workers). This research study found that educational systems and the qualifications of the respondents are related, which supports this researcher’s opinion. 102 • Q11 “financial infrastructure” As with educational systems, financial infrastructure is important for 75.5% (n=43) of the respondents but, unfortunately, with a mean of 3.00, this factor is part of the bottom five of the mean ratings. Côte D’Ivoire has and offers one of the best financial infrastructures in the Africa sub-region, as explained in Chapter 2. This may explain why investors consider investing in Côte D’Ivoire. However this dimension was not ranked highly. • Q12 “legal environment for investment and business” With a mean rating of 3.26, legal environment for investment and business is one of the most important determinants, accounting for 82.4% (n=47) of the respondents, it is also considered by them to be part of the five most important factors. This determinant represents the security aspect of any investment for many investors. The findings of this study confirm that of various studies conducted by Dunning (1994), UNCTAD (1998), Marios and Spyros (2007), and Mottaled (2007), which point to the importance of the legal environment for investment and business as a major determinant for FDI. For example, Dunning (1994) discovered that the creation of an investment climate conducive to FDI depends on a host government’s ability to create a range of favorable political and Economic conditions and, which include: • Progressive Economic objectives and policies, including perceived support for FDI and a privatization regime conducive to FDI • The ability to exercise corporate governance without arbitrary bureaucratic interference • The existence of a transparent and fair taxation system and legal framework, with mechanisms for enforcing property rights and resolving contractual disputes • The minimization of crime and corruption or, at least, their effects on inward investors • The adaptation of firms and managers to competitive forms of management and operation. 103 In the ambit of this study, Côte D’Ivoire has made considerable strides in the implementation of the above mentioned conditions in establishing a favorable legal environment for investment and business (e.g. establishment of Côte D’Ivoire’s Investment and Promotion agency (CEPICI); with the objective of establishing a framework for FDI attraction), that could also be the explanation of importance of this determinant for the respondents of the study. • Q13 “equal treatment between locally owned firms and foreign companies” World Investment Report (1998:Online) study has found that the standard of treatment of foreign affiliates is an important determinant for FDI under any country policy framework. This finding is aligned with the findings of this study, in regard to this determinant. 79% (n=45) of the survey respondents found equal treatment between locally owned firms and foreign companies as being an important factor in their decision to invest in Côte D’Ivoire 35.1% (n=20) of the respondents who supported this finding were from service companies, which indicates that this determinant is of great importance for that sector in their decision making processes. The explanation of why equal treatment between locally owned firms and foreign companies has a great importance for respondents and yet it is not part of the top five most important determinants of the survey mean rankings is that the Côte D’Ivoire Investment Promotion Center has it covered. According to C.I new investment code (1995), local and foreign owned companies are treated in the same manner. • Q14 “tariffs and quotas” As with all other determinants, tariffs and quotas was considered by 64.9% (n=37) of the respondents as an important factor in their investment decision processes. Again, UNCTAD’s 1998 study of host country determinants of FDI, found that under a country’s trade policy that tariff and non-tariff barriers, and coherence of FDI and trade policy and tax policy, are all important determinants for attraction of FDI. Added to that, Leonard et al. (2005) awarded the same importance with regard to a government’s policy framework for tariffs and quotas for attraction of FDI. This study also revealed that, with a mean of 2.77, tariffs and quotas are at the bottom five 104 mean ratings. That means although the determinant is important for the survey respondent, tariffs and quotas are not part of the five most important determinants in their decision making processes. The reason for that is that Côte D’Ivoire officials can provide incentives in terms of tariffs and quotas, which is the reason this factor is regarded as less important in this study. • Q15 “using Côte D’Ivoire as an export base” Charles Hill (2009) defined exporting as a process of manufacturing the product in a centralized location (home or abroad) and exporting it to other national markets. In this study using Côte D’Ivoire as an export base and respondent type of company are related. Except for construction companies, all the companies surveyed showed great interest in this determinant. 8 out of 9, 11 out of 14, 7 out of 10, and 20 out of 23 respectively from government official perception, manufacturing, mining and service companies. Again, within company type, 35.1% (n=20) of the respondents are from service companies. The finding of this study is that most of the respondents from service companies were willing to use Côte D’Ivoire as an export base. Another finding revealed that respondent position and this determinant are related. More than 80% within the respondent position are willing to use Côte D’Ivoire as an export base. Among those respondents, executives accounted for 50.9% (n=29); which means that most executives who participated in this study saw this determinant as important in their investment decision processes. For the purpose of this study, Vernon’s 1971 product’s life cycle theory (where at a mature phase multinationals tend to shift their production to take advantage from a specific location endowment and export the product back home or into other markets) quoted by Anthony and Kwame (2008) could be a theoretical explanation of the importance of this determinant to respondents. Côte D’Ivoire port, the biggest one in Africa, after Durban port in South Africa, may be an explanation of why using Côte D’Ivoire as an export base is important for most of the respondents. The determinant is noted as ranking among the top five most 105 important determinants because Côte D’Ivoire offered them a quality export infrastructure. • Q16 “high expected rate of return in supplying primarily in Côte D’Ivoire” 80.7% (n=46) of the respondents regarded this determinant as important in their investment decision processes. Another finding is that respondent qualification and expected high rate of return in supplying primarily in Côte D’Ivoire are related. Also within the respondent qualification, 47.4% (n=27) of the economists responded to this determinant as important in their investment decision processes. The finding of this study on this determinant is confirmed by a study conducted by Recep and Bernur (2009:106 quoted Christiansen & Ogutcu (2002)). The finding of this study is that, in general, foreign investors are influenced by three broad groups of factors: (1) The profitability of the projects (2) The ease with which subsidiary operations can be integrated into investor’s global strategies (3) The overall quality of the host country’s enabling environment While Dunning (1994) found that TNCs motives for FDI exercised a major influence on the potential Economic benefits which can accrue to host countries. TNCs engaging in FDI are seeking specific and identifiable advantages, such as: • Access to natural resources: physical and human (resource-seeking FDI) • Access to markets: local or adjacent ( market-seeking FDI) • Product or process rationalization/specialization: across or along the value chain (efficiency-seeking FDI) • The acquisition or linkage into foreign assets including technology, organizational efficiency, or markets (strategic asset-seeking FDI) Most FDI flows in the 1980s and 1990s have taken place within the triad, and have been of the efficiency or asset-seeking kind. In contrast, the majority of FDI flows from developed to transitional economies during the same period was motivated by the search for natural resources or market access. 106 6.2.3 Principal Component Findings and Discussion Here, the following five components were extracted and classified as determinants for attracting FDI in Côte D’Ivoire from the component analysis: Component 1: Q3 “cheaper input”; Q4 “cheaper labor”; Q5 “level of cooperation with locally owned firms”; Q12 “legal environment for investment and business”; Q13 “equal treatment between locally owned firms and foreign companies” and Q14 “tariffs and quotas” were classified as Factor 1 and measures: legislation as a determinant of FDI. Component 2: Q7 “physical infrastructure”; Q9 “investment incentives”; Q10 “educational systems” and Q11 “financial infrastructure” are classified as Factor 2 and measures: Côte D’Ivoire infrastructure and human resource/capital as determinant of FDI. Component 3: Q1 “promising performance of Côte D’Ivoire economy” and Q2 “growing local market” were classified as Factor 3 and measures: Côte D’Ivoire macro-Economic environment/indicators as determinant of FDI. Component 4: Q6 “geographical location of Côte D’Ivoire” and Q15 “using Côte D’Ivoire as an export base” were classified as Factor 4 and measures: Côte D’Ivoire geographical position as determinant of FDI. Component 5: Q8 “peaceful industrial relations” and Q16 “high expected rate of return in supplying primarily in Côte D’Ivoire” were classified as Factor 5 and measures: Côte D’Ivoire labour law as determinant of FDI. After the classification of those factors, the variable/question mean ranking was conducted (see Table 5.22). Thereafter, a mean rating for each component or factor was conducted and the average mean for each factor classified as a determinant of 107 FDI in Côte D’Ivoire was extracted (see Table 5.23). The objective of this further analysis was to see which of the factors were most important FDI determinants for Côte D’Ivoire. The mean ratings for the factors revealed the following: Factor 3 “Côte D’Ivoire macro-Economic environment/indicator as determinant of FDI” showed an average mean of 3.39 the highest average mean among the five factors. This means that Factor 3 was considered by the respondents to be the most important determinant affecting their investment decision processes. This finding is confirmed by the findings from variable/question mean ratings, where Q1 “promising performance of Côte D’Ivoire economy” and Q2 “growing local market” were respectively ranked first and second among the top five mean ratings, with 3.44 and 3.33. It may then be concluded that from this research study Côte D’Ivoire MacroEconomic environment/Indicator as determinant of FDI is considered to be the most important determinant. The determinant comprised or included variable Q1 “promising performance of Côte D’Ivoire economy” and Q2 “growing local market,” which were also considered to be the most important variables for the research respondents. Factor 4 “Côte D’Ivoire geographical position as determinant of FDI” with 3.19 as an average mean, it was the second highest average mean after Factor 3. This indicates that Côte D’Ivoire’s geographical position as determinant of FDI is considered by respondents to be the second most important determinant of FDI within their investment decision processes. This finding is also confirmed by the variable/question mean ratings, where Q6 “geographical location of Côte D’Ivoire” was at the third position, with a mean of 3.26, among the top five of the mean ratings and Q15 “using Côte D’Ivoire as an export base” was at the second position, with a mean of 3.12, among the bottom five of the mean ratings. It was explained that being among the bottom five of the mean ratings doesn’t necessarily mean that the variable isn’t important. The explanation was that Côte D’Ivoire has successfully 108 provided those variables which, therefore, respondents don’t see as most important in their investment decision making processes. To confirm this, 80.7% (n=46) of the respondents took Q15 into account as an important variable within their investment decision process. We can then conclude that most of the research study respondents identified Factor 4 “Côte D’Ivoire geographical position as determinant of FDI” as the second most important determinant within their investment decision processes. That determinant includes Variable Q6 “geographical location of Côte D’Ivoire” and Q15 “using Côte D’Ivoire as an export base,” as confirmed by the variable mean rating analysis. Factor 5 “C.I Labor Law as determinant of FDI” had an average mean of 3.11, the third highest among the five factors. This finding revealed that Factor 5 “C.I labor law as determinant of FDI” was considered by the research respondents to be the third most important determinant of FDI within their investment decision processes. This determinant includes variables Q8 “peaceful industrial relations,” which scored 3.05 as a mean rating from the variable mean ratings analysis, and Q16 “high expected rate of return in supplying primarily in Côte D’Ivoire,” which scored a mean of 3.11 from the variable mean ratings analysis. None of those variables were ranked among the top or bottom five from the mean ratings analysis but somewhere in between. As can be seen Factor 5, as a third most important determinant in Côte D’Ivoire for the research respondents, was unpredictable from the previous analysis. Yet the respondents still did find it to be an important variable. The explanation could be, even though variables Q8 and Q16 didn’t predict the outcome of this determinant as a third most important factor, they scored a mean of 3.05 and 3.11 respectively, which is above 3 and among the top ten mean ratings analysis. It can, therefore, be concluded that Factor 5 “C.I Labor Law as determinant of FDI” is classified by the research respondents as a third most important determinant of FDI that they consider within their investment decision processes. Also we can conclude that 109 variables Q8 “peaceful industrial relations,” which scored 3.05 as a mean rating, and Q16 “high expected rate of return in supplying primarily in Côte D’Ivoire” which scored a mean of 3.11, were among the top ten variable mean ratings analysis but didn’t predict the finding of Factor 5. Factor 2 “Côte D’Ivoire infrastructure and human resource/capital as determinant of FDI” with an average mean of 3.06, it is the fourth highest among the top five factors, which indicates that Factor 2 “C.I infrastructure and human resource/capital as determinant of FDI” was considered by respondents to be the fourth most important determinant of FDI within their decision making processes. This finding is confirmed by the finding of the variable mean ratings analysis, where variables Q7 “physical infrastructure,” with a mean of 3.19, ranks among the top ten mean ratings; Q9 “investment incentives,” with a mean of 3.23, ranks among the top five mean ratings; Q10 “educational systems,” with a mean of 2.81, and Q11 “financial infrastructure,” with a mean of 3, is a first among a bottom five. It is evident that variables Q7 and Q9 predicted a finding of Factor 2. It may then be concluded that Factor 2 “Côte D’Ivoire infrastructure and human resource/capital as determinant of FDI” was classified by the research respondents as the fourth most important determinant of FDI within their decision making processes. This determinant comprises or includes the following variables: Q7 “physical infrastructure”, Q9 “investment incentives”, Q10 “educational systems”, and Q11 “financial infrastructure” which findings, considering from the variable mean ratings analysis, could be expected. Factor 1 “The country (Côte D’Ivoire) legislation as determinant of FDI”. This factor scored an average mean of 2.98, which is ranked at the bottom among the top five factors. This finding reveals that Factor 1 “The country (Côte D’Ivoire) legislation as determinant of FDI” is the fifth most important determinant of FDI in Côte D’Ivoire. This finding is perfectly aligned with the findings of the variable mean ratings analysis, where most of the following variables, (Q3 “ cheaper input” with a mean of 2.84 is among a bottom five ; 110 Q4 “ cheaper labor” with a mean of 2.77, also among a bottom five; Q5 “level of cooperation with locally owned firms”, with a mean ratings of 3.05; Q12 “legal environment for investment and business”, with a mean ratings of 3.26 is among the top five; Q13 “equal treatment between locally owned firms and foreign companies”, with a mean of 3.02 is among a bottom six, and Q14 “tariffs and quotas”, with a mean ratings of 2.77 is also among a bottom five) were among the bottom five. As previously explained, being among the bottom five doesn’t mean that the variable is not important for respondents. The researcher concludes that Factor 1 “The country (Côte D’Ivoire) legislation as determinant of FDI” was identified by most research respondents as the fifth most important determinant of FDI within their investment decision in Côte D’Ivoire. This determinant includes variables Q3 “cheaper input”; Q4 “cheaper labor”, Q5 “level of cooperation with locally owned firms”, Q12 “legal environment for investment and business”, Q13 “equal treatment between locally owned firms and foreign companies”, and Q14 “tariffs and quotas” from which, as a result of this study, this finding was expected. 6.3 Conclusion about the Research Question and Objectives. The aim of this study was to broadly find clues to the question of what are the most critical determinants of FDI that should be addressed or established by Côte D’Ivoire in order to make the country more competitive in attracting this form of investment? The result of the research study indicates that the two determinants that were of least importance to the economy of Côte D’Ivoire were the Infrastructure and Human Resource/Capital. “Legislation” however, ranked amongst the five most critical determinants of FDI and Côte D’Ivoire officials or the government may need to address to make the country more competitive in attracting FDI. Côte D’Ivoire does offer a sound modern infrastructure but that needs to be further improved because since 1960 the road infrastructure has remained the same and is not in a good condition. The only road development since that time registered in the country was in 111 1990. This regional road called “la cotiere” was developed to reduce and facilitate the transport of goods between the country’s two ports. With regard to the human capital, since the early 1990s the quality of human capital was negatively impacted by consecutive crises in the education sector. The level of quality of the human capital is low; most of the national and foreign firms prefer workers who have completed their qualifications outside the country. Côte D’Ivoire has good legislation in place but problems still arise from its application. The level of confidence in the justice system remains low, which is not good for new investors. The researcher believes that the country can be more competitive in attracting FDI if officials or the government would take the necessary action to address these critical determinants of FDI. 6.3.2 What are the main determinants of FDI attraction? This study revealed that Côte D’Ivoire Macroeconomic environment/indicator, geographical position/location, labor law, infrastructure and human resource/capital and legislation were the main determinants of FDI attraction in Côte D’Ivoire. Those five main determinants are the result of the component analysis which included all sixteen variables of the survey instrument. 6.3.3 What Determinants are applicable to Côte D’Ivoire in terms of establishing competitive advantage to attract FDI? The result of this research indicated that Côte D’Ivoire Macroeconomic environment/indicator and geographical position/location were the first two most important determinants for attracting FDI into Côte D’Ivoire. The importance of the role that the economy plays in the African sub-regional body (ECOWAS) was highlighted in Chapter 2, which states that it accounted for 40% of the reserve of the body. In addition, the benefit gained by the surrounding neighbouring countries, including Burkina Faso and Mali from Côte D’Ivoire’s geographical position was also highlighted. They used Côte D’Ivoire as an export/import base. Those 112 explanations clearly reveal why the above first two most important determinants can give a competitive advantage in attracting FDI to Côte D’Ivoire 6.3.4 Which types of determinants are viewed as the most important by Investors? The findings of this study have demonstrated the importance of all sixteen determinants by investors, the following five (1) promising performance of Côte D’Ivoire economy; (2) growing Côte D’Ivoire local market; (3) geographical location of Côte D’Ivoire; (4) Côte D’Ivoire legal environment for investment and business and (5) investment incentives; were viewed by them as the most important determinants in their investment decision making processes. 6.3.5 How can Côte D’Ivoire reshape or reorient its current strategies in attracting FDI? The current strategy applied in attracting FDI to Côte D’Ivoire is based on the activities of the investment and promotion center (CEPICI), which needs to develop new and aggressive strategies. Currently the prospective investors find their own way to an investment opportunity in Côte D’Ivoire and then approach CEPICI. It is the researcher’s opinion this strategy need to be reshaped into an aggressive strategy, which will consist of some scheduled promotional activities on the different continents, to present potential opportunities offered by Côte D’Ivoire in terms of businesses and tourism, to name but two. In addition, Côte D’Ivoire officials worked to only promote the traditional FDI determinants, which were the geographical position of the country and the availability of raw materials; however, this study has revealed new determinants, including: (1) the Macroeconomic environment/indicator, (2) labor law, (3) infrastructure and human resource/capital, and (4) the legislation. The Côte D’Ivoire policy makers 113 need to consider those new determinants and establish a new, more appropriate framework for attracting FDI to Côte D’Ivoire. 6.4 Theoretical Implications Dunning’s (1979, 1980) eclectic paradigm (also known as the OLI paradigm), is a heavily applied paradigm in the FDI sphere. Various studies, including the Alan et al. (2000) study, “the obstacles to FDI in Russia,” and the Coskun (2001) study, “determinants of FDI in Turkey,” were based on the Dunning OLI paradigm. Coskun (2001) found the following to be the most important determinants of FDI in Turkey: Promising performance of Turkey’s economy and growing the local market. Further, cheaper inputs; cheaper labour; and co-operative behavior with locally owned firms were identified as moderate determinants by respondents. This study was also inspired by a Dunning OLI paradigm and the findings are not much different from Coskun’s findings. Here too, the promising performance of the Côte D’Ivoire economy and its growing local market were identified as the two most important determinants. In addition, the geographical location of Côte D’Ivoire; the Côte D’Ivoire legal environment for investment; and business and investment incentives were also viewed as forming part of the five most important determinants for attracting FDI into Côte D’Ivoire . This study also found that location advantages from the OLI paradigm is the most relevant to Côte D’Ivoire because of the promising performance of the C.I economy and its growing local market, associated with its geographical location, legal environment for investment, and business and investment incentives are all the location advantages offered by Côte D’Ivoire Regarding the ownership and internalization advantages of the paradigm, the researcher is of the opinion they are not relevant to Côte D’Ivoire . 114 6.5 Managerial Implications Historically the geographical position of Côte D’Ivoire, its abundance of raw materials, and Economical performance were regarded by respondent officials as the most important determinants of attracting FDI into Côte D’Ivoire. This study has found that Côte D’Ivoire Macroeconomic environment/indicator, geographical position/location, labor law, infrastructure, human resource/capital, and Côte D’Ivoire legislation system are currently the most important determinants of attracting FDI into Côte D’Ivoire. Those findings demonstrate that investors’ location decisions can vary over time, which confirms the findings of Junjie (2008); while, he conducted research on “world trade organization accession and FDI in China”. In the case of Côte D’Ivoire, the government or its officials who deal with investment promotion must consider those new findings in their identification of a useful mechanism for establishing an appropriate framework for attracting FDI into Côte D’Ivoire 6.6 Limitations and areas for further research The findings of this study are only applicable to Côte D’Ivoire since the entire study was restricted to that country and to the investors operating in Côte D’Ivoire. In addition, the unavailability and difficult cooperation of some respondents made it impossible to reach a sample of 100. Since this research targeted Côte D’Ivoire, the next objective would be to conduct further research, to identify the determinants of FDI attraction in West Africa as a region. 6.7 Recommendations The findings of the research can be used by Côte D’Ivoire government or officials for the following: to provide a framework for establishing or improving FDI infrastructure in Côte D’Ivoire 115 to provide a frame of reference on how to identify the most important determinants for FDI attraction in the future. to contribute ideas towards a generic frame of reference for Côte D’Ivoire as an example for other countries in Africa. to contribute in the identification of a useful mechanism for establishing an appropriate framework for attracting FDI. 6.8 Conclusion The objective of this study was to assist Côte D’Ivoire government officials to become more aware of the competitive determinants for FDI attraction. This was motivated by the fact that Côte D’Ivoire, as is currently the case in all countries in Africa, lag behind in terms of FDI attraction. since FDI is an important variable in the development process of any country (especially needed for aid countries like Côte D’Ivoire), as justified by the experiences of the east Asian tiger economies, the researcher found it important to undertake this study. This research revealed that investors investing in Côte D’Ivoire are chiefly motivated by five determinants: (1) the promising performance of Côte D’Ivoire economy; (2) the growing Côte D’Ivoire local market; (3) the geographical location of Côte D’Ivoire; (4) the Côte D’Ivoirian legal environment for investment and business and (5) the investment incentives. 116 7. References ALAN, R. 2001. The End of Globalization. A new and radical analysis of globalization and what it means for business. Random House Business Books: United Kingdom ALVIN,G. W. & DENSIL, A.W. 2002. 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[Access on 08-07-2010] 128 APPENDIX A: INFORMATION AND CONSENT SHEET This questionnaire represents the research component of my study which is in partial completion of my MBA research project. The aim of the study is to identify the determinants of foreign direct investment in Côte D’Ivoire. The results of the study are expected to contribute considerably to a better understanding of determinants of foreign direct investment in Côte D’Ivoire and other developing countries. By participating in this research project, you will be making a valuable contribution in this regard. I thank you in advance for your valuable time and input in completing this questionnaire. If you agree to participate then you will be deemed to have given consent to the appropriate use of information provided. As a participant, you can be assured of complete anonymity and that your responses will be collated with others and treated with the strictest confidentiality. In order to gain maximum benefit from this research project, it is important that you respond as openly as possible. I also request that you respond to all the questions. Again, thank you for your willingness to participate in this research project. Your time and contribution is greatly appreciated. For French Speakers Pour l’achèvement des travaux de recherché de mon MBA, je sollicite votre contribution pour remplir le questionnaire ci-joint, envue de m’aider dans ma tentative a identifier les déterminants de l’investissement direct étranger en Côte D’Ivoire. En participant a ce projet de recherché, votre apport sera de grande valeur dans l’identification des déterminants du niveau actuel de l’investissement direct étranger en Côte D’Ivoire. Merci de prendre sur votre précieux temps pour remplir ce questionnaire. Etant une personne interrogée, vous pouvez être rassurée de la stricte confidentialité que nous 129 réservons a vos réponses. Dans le but de profiter au maximum de ce projet de recherché, il est indispensable que vos réponses soient sincères et honnêtes. Aussi, est il important de vérifier si vous avez répondu a toutes les questions. Encore merci pour votre volonté de participer a ce projet de recherché. Nous apprécions en outré votre contribution a sa juste valeur. Traore yacouba Cell: +225 03 69 09 93 / +27 72 106 70 17 Email: [email protected] [email protected] 130 APPENDIX B: DATA COLLECTION QUESTIONNAIRE DETERMINANTS DE L’INVESTISSEMENT DIRECT ETRANGER EN CÔTE D’IVOIRE DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN CÔTE D’IVOIRE ----------------------------------------------------------------------------------------------------------------------------------------CHARACTERISTICS DE LA PERSONNE INTERROGEE CHARACTERISTICS OF THE RESPONDENT QUALIFICATION: POSTE/POSITION: SOCIETE/ COMPANY or DEPARTEMENT MINISTERIEL/ GOVERNMENT DEPARTMENT: CONTACT: Email: ============================================================= ======================== Utiliser les equivalences suivantes pour remplir le questionnaire/use the following descriptors to complete the questionnaire: 0 = pas important/unimportant 1 = de moindre importance/ of little importance 2 = important 3 = tres important/ very important ============================================================= ======================== Cochez chaque element d’une croix (X) dans la case correspondente en vous servant des equivalences ci-dessus/ mark each of the items with an X according to the above descriptors. 1.Performances prometteuse de l’economie ivoirienne/ promising performance of the Côte D’Ivoireeconomy. 131 0 1 2 3 2. Croissance du marche local/ growing local market. 0 1 2 3 2 3 2 3 3. Apports bon marche/cheaper input. 0 1 4. Travail bon marche/cheaper labor. 0 1 5. Niveau de cooperation avec the patronat des enterprises ivoirienne/co-operation behavior of locally owned firms. 0 1 2 3 6.Situation geographique de la Côte D’Ivoire/geographical location of Côte D’Ivoire. 0 1 2 3 7. Infrastructure physique/ physical infrastructure. 0 1 2 3 8. Paisibles relations industrielles/peaceful industrial relations. 0 1 2 3 9. Motivations ou incitations d’investissement/ investment incentives. 0 1 2 10. Systems d’enseignement/educational standards. 132 3 0 1 2 3 11. Infrastructure financiere/financial infrastructure. 0 1 2 3 12. L’environnement legal pour l’investissement et les affaires/legal environment for investment and business. 0 1 2 3 13. equitabilite dans le traittement entre les enterprises national et etrangeres/equal treatment with locally owned firms. 0 1 2 3 2 3 14. Droits et quotas/ tarifs and quotas 0 1 15. Utiliser la Côte D’Ivoirecomme une base d’exportion/using Côte D’Ivoireas an export base. 0 1 2 3 16.Taux de retour sur investissement prevu eleve en Côte D’Ivoire/ high expected rate of return in supplying primarily in Côte D’Ivoire. 0 1 2 3 Individually, Out of the 16 items, Q3 “cheaper input (meaning raw material and semifinished products)”, Q4 “cheaper labor”, Q5 “level of cooperation with locally owned firms”, Q12 “legal environment for investment and business”, Q13 “equal treatment 133 between locally owned firms and foreign companies”, and Q14 “tariffs and quotas” measure the Côte D’Ivoirian legislation as determinants of FDI. Items Q7 “physical infrastructure”, Q9 “investment incentives”, Q10 “educational systems” and Q11 “financial infrastructure” measure the Côte D’Ivoirian infrastructure and human resource/capital as determinants of FDI. Items Q1 “promising performance of Côte D’Ivoireeconomy” and Q2 “growing local market” measure the Côte D’Ivoirian macro-Economic environment/indicator as determinants of FDI. Items Q6 “geographical location of Côte D’Ivoire” and Q15 “using Côte D’Ivoireas an export base” measure the Côte D’Ivoirian geographical position as determinants of FDI. And Items Q8 “peaceful industrial relations” and Q16 “high expected rate of return in supplying primarily in Côte D’Ivoire” measure the Côte D’Ivoirian labour law as determinants of FDI. Merci d’avoir pris de votre temps pour remplir ce questionnaire et d’avoir ete une aide appreciable dans l’achevement de mon memoire. Thank you for taking your time to complete this questionnaire and assisting me to complete my studies. Yacouba Traore Business School Tshwane University of Technology 134 APPENDIX C: CROSS TABULATION QUALIFICATION AND VARIABLES Qualification 1 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 2 Not important Count 0 Column N% .0% Little important 0 Important 3 Count 0 Column N% .0% .0% 0 7 70.0% Very Important 3 Not important 4 Count 0 Column N% .0% .0% 0 2 100.0% 30.0% 0 0 .0% Little important 1 Important 4 Very Important 5 Count 0 Column N% .0% Count 0 Column N% .0% .0% 1 3.0% 0 .0% 4 40.0% 16 48.5% 1 50.0% .0% 6 60.0% 16 48.5% 1 50.0% 0 .0% 0 .0% 0 .0% 0 .0% 10.0% 0 .0% 0 .0% 4 12.1% 0 .0% 40.0% 2 100.0% 5 50.0% 16 48.5% 1 50.0% 5 50.0% 0 .0% 5 50.0% 13 39.4% 1 50.0% Not important 1 10.0% 0 .0% 0 .0% 2 6.1% 0 .0% Little important 1 10.0% 2 100.0% 1 10.0% 10 30.3% 0 .0% Important 5 50.0% 0 .0% 7 70.0% 15 45.5% 2 100.0% Very Important 3 30.0% 0 .0% 2 20.0% 6 18.2% 0 .0% Not important 0 .0% 0 .0% 0 .0% 1 3.0% 0 .0% Little important 1 10.0% 2 100.0% 1 10.0% 9 27.3% 0 .0% Important 8 80.0% 0 .0% 6 60.0% 17 51.5% 2 100.0% Very Important 1 10.0% 0 .0% 3 30.0% 6 18.2% 0 .0% Not important 1 10.0% 0 .0% 0 .0% 0 .0% 0 .0% Little important 0 .0% 1 50.0% 2 20.0% 10 30.3% 0 .0% Important 3 30.0% 1 50.0% 3 30.0% 16 48.5% 2 100.0% Very Important 6 60.0% 0 .0% 5 50.0% 7 21.2% 0 .0% Not important 0 .0% 0 .0% 0 .0% 2 6.1% 1 50.0% Little important 3 30.0% 1 50.0% 2 20.0% 3 9.1% 1 50.0% Important 2 20.0% 0 .0% 4 40.0% 7 21.2% 0 .0% Very Important 5 50.0% 1 50.0% 4 40.0% 21 63.6% 0 .0% Not important 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% Little important 0 .0% 0 .0% 3 30.0% 3 9.1% 0 .0% Important 4 40.0% 2 100.0% 5 50.0% 21 63.6% 2 100.0% Very Important 6 60.0% 0 .0% 2 20.0% 9 27.3% 0 .0% Not important 0 .0% 0 .0% 0 .0% 2 6.1% 0 .0% Little important 2 20.0% 1 50.0% 3 30.0% 3 9.1% 0 .0% Important 3 30.0% 1 50.0% 3 30.0% 21 63.6% 2 100.0% Very Important 5 50.0% 0 .0% 4 40.0% 7 21.2% 0 .0% Not important 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 135 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Little important 1 10.0% 0 .0% 1 10.0% 8 24.2% 0 .0% Important 3 30.0% 2 100.0% 6 60.0% 12 36.4% 1 50.0% Very Important 6 60.0% 0 .0% 3 30.0% 13 39.4% 1 50.0% Not important 1 10.0% 0 .0% 1 10.0% 2 6.1% 0 .0% Little important 0 .0% 2 100.0% 7 70.0% 11 33.3% 0 .0% Important 5 50.0% 0 .0% 2 20.0% 9 27.3% 0 .0% Very Important 4 40.0% 0 .0% 0 .0% 11 33.3% 2 100.0% Not impotant 0 .0% 0 .0% 1 10.0% 1 3.0% 0 .0% Little important 1 10.0% 0 .0% 2 20.0% 9 27.3% 0 .0% Important 4 40.0% 0 .0% 5 50.0% 16 48.5% 2 100.0% Very Important 5 50.0% 2 100.0% 2 20.0% 7 21.2% 0 .0% Not impotant 0 .0% 0 .0% 0 .0% 1 3.0% 0 .0% Little important 1 10.0% 0 .0% 1 10.0% 7 21.2% 0 .0% Important 4 40.0% 1 50.0% 5 50.0% 11 33.3% 0 .0% Very Important 5 50.0% 1 50.0% 4 40.0% 14 42.4% 2 100.0% Not impotant 1 10.0% 0 .0% 0 .0% 2 6.1% 0 .0% Little important 1 10.0% 1 50.0% 0 .0% 7 21.2% 0 .0% Important 5 50.0% 0 .0% 6 60.0% 16 48.5% 2 100.0% Very Important 3 30.0% 1 50.0% 4 40.0% 8 24.2% 0 .0% Not impotant 1 10.0% 1 50.0% 1 10.0% 1 3.0% 0 .0% Little important 3 30.0% 0 .0% 2 20.0% 11 33.3% 0 .0% Important 5 50.0% 1 50.0% 4 40.0% 14 42.4% 2 100.0% Very Important 1 10.0% 0 .0% 3 30.0% 7 21.2% 0 .0% Not impotant 0 .0% 0 .0% 0 .0% 2 6.1% 0 .0% Little important 2 20.0% 1 50.0% 2 20.0% 4 12.1% 0 .0% Important 4 40.0% 1 50.0% 7 70.0% 12 36.4% 2 100.0% Very Important 4 40.0% 0 .0% 1 10.0% 15 45.5% 0 .0% Not impotant 0 .0% 1 50.0% 0 .0% 0 .0% 0 .0% Little important 3 30.0% 1 50.0% 0 .0% 6 18.2% 0 .0% Important 2 20.0% 0 .0% 6 60.0% 18 54.5% 2 100.0% Very Important 5 50.0% 0 .0% 4 40.0% 9 27.3% 0 .0% 136 APPENDIX D: CROSS TABULATION POSITION AND VARIABLES position 1 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 137 2 3 Not impotant Count 0 Column N % .0% Count 0 Column N % .0% Count 0 Column N % .0% Little important 0 .0% 1 5.3% 0 .0% Important 21 61.8% 8 42.1% 1 25.0% Very Important 13 38.2% 10 52.6% 3 75.0% Not impotant 0 .0% 0 .0% 0 .0% Little important 2 5.9% 2 10.5% 1 25.0% Important 17 50.0% 9 47.4% 2 50.0% Very Important 15 44.1% 8 42.1% 1 25.0% Not impotant 3 8.8% 0 .0% 0 .0% Little important 6 17.6% 8 42.1% 0 .0% Important 17 50.0% 9 47.4% 3 75.0% Very Important 8 23.5% 2 10.5% 1 25.0% Not impotant 0 .0% 1 5.3% 0 .0% Little important 7 20.6% 6 31.6% 0 .0% Important 19 55.9% 11 57.9% 3 75.0% Very Important 8 23.5% 1 5.3% 1 25.0% Not impotant 0 .0% 1 5.3% 0 .0% Little important 6 17.6% 7 36.8% 0 .0% Important 16 47.1% 6 31.6% 3 75.0% Very Important 12 35.3% 5 26.3% 1 25.0% Not impotant 2 5.9% 1 5.3% 0 .0% Little important 5 14.7% 3 15.8% 2 50.0% Important 6 17.6% 5 26.3% 2 50.0% Very Important 21 61.8% 10 52.6% 0 .0% Not impotant 0 .0% 0 .0% 0 .0% Little important 2 5.9% 3 15.8% 1 25.0% Important 20 58.8% 13 68.4% 1 25.0% Very Important 12 35.3% 3 15.8% 2 50.0% Not impotant 1 2.9% 1 5.3% 0 .0% Little important 6 17.6% 2 10.5% 1 25.0% Important 15 44.1% 13 68.4% 2 50.0% Very Important 12 35.3% 3 15.8% 1 25.0% Not impotant 0 .0% 0 .0% 0 .0% Little important 5 14.7% 5 26.3% 0 .0% Important 14 41.2% 6 31.6% 4 100.0% Q10 Q11 Q12 Q13 Q14 Q15 Q16 138 Very Important 15 44.1% 8 42.1% 0 .0% Not impotant 1 2.9% 2 10.5% 1 25.0% Little important 11 32.4% 7 36.8% 2 50.0% Important 10 29.4% 6 31.6% 0 .0% Very Important 12 35.3% 4 21.1% 1 25.0% Not impotant 1 2.9% 1 5.3% 0 .0% Little important 4 11.8% 7 36.8% 1 25.0% Important 18 52.9% 8 42.1% 1 25.0% Very Important 11 32.4% 3 15.8% 2 50.0% Not impotant 1 2.9% 0 .0% 0 .0% Little important 4 11.8% 5 26.3% 0 .0% Important 16 47.1% 4 21.1% 1 25.0% Very Important 13 38.2% 10 52.6% 3 75.0% Not impotant 3 8.8% 0 .0% 0 .0% Little important 6 17.6% 3 15.8% 0 .0% Important 16 47.1% 11 57.9% 2 50.0% Very Important 9 26.5% 5 26.3% 2 50.0% Not impotant 3 8.8% 1 5.3% 0 .0% Little important 10 29.4% 5 26.3% 1 25.0% Important 15 44.1% 9 47.4% 2 50.0% Very Important 6 17.6% 4 21.1% 1 25.0% Not impotant 2 5.9% 0 .0% 0 .0% Little important 3 8.8% 3 15.8% 3 75.0% Important 14 41.2% 11 57.9% 1 25.0% Very Important 15 44.1% 5 26.3% 0 .0% Not impotant 1 2.9% 0 .0% 0 .0% Little important 4 11.8% 5 26.3% 1 25.0% Important 20 58.8% 7 36.8% 1 25.0% Very Important 9 26.5% 7 36.8% 2 50.0% APPENDIX E: CROSS TABULATION TYPE OF COMPANY AND VARIABLES type of company Q1 Q2 Q3 Q4 139 Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt Construction Cou Colum nt nN% 0 .0% government Cou Colum nt nN% 0 .0% manufacture Cou Colum nt nN% 0 .0% mining Cou Colum nt nN% 0 .0% service Cou Colum nt nN% 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 1 4.3% 0 .0% 6 66.7% 6 42.9% 7 70.0% 11 47.8% 1 100.0 % 3 33.3% 8 57.1% 3 30.0% 11 47.8% 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 2 20.0% 3 13.0% 1 100.0 % .0% 5 55.6% 7 50.0% 5 50.0% 10 43.5% 4 44.4% 7 50.0% 3 30.0% 10 43.5% 0 1 100.0 % 0 .0% 1 7.1% 1 10.0% 0 .0% 0 .0% 5 55.6% 1 7.1% 2 20.0% 6 26.1% 0 .0% 2 22.2% 9 64.3% 4 40.0% 14 60.9% 0 .0% 2 22.2% 3 21.4% 3 30.0% 3 13.0% 0 .0% 0 .0% 1 7.1% 0 .0% 0 .0% 1 100.0 % 2 22.2% 1 7.1% 2 20.0% 7 30.4% 0 .0% 6 66.7% 10 71.4% 6 60.0% 11 47.8% 0 .0% 1 11.1% 2 14.3% 2 20.0% 5 21.7% Q5 Q6 Q7 Q8 Q9 140 Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt 0 .0% 0 .0% 1 7.1% 0 .0% 0 .0% 0 .0% 3 33.3% 4 28.6% 1 10.0% 5 21.7% 1 100.0 % .0% 3 33.3% 5 35.7% 4 40.0% 12 52.2% 3 33.3% 4 28.6% 5 50.0% 6 26.1% 0 1 100.0 % 0 .0% 1 7.1% 0 .0% 1 4.3% 0 .0% 1 11.1% 1 7.1% 3 30.0% 5 21.7% 0 .0% 3 33.3% 2 14.3% 1 10.0% 7 30.4% 0 .0% 5 55.6% 10 71.4% 6 60.0% 10 43.5% 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 1 11.1% 3 21.4% 0 .0% 2 8.7% 1 4 44.4% 6 42.9% 5 50.0% 18 78.3% 0 100.0 % .0% 4 44.4% 5 35.7% 5 50.0% 3 13.0% 0 .0% 2 22.2% 0 .0% 0 .0% 0 .0% 0 .0% 1 11.1% 2 14.3% 2 20.0% 4 17.4% 1 4 44.4% 9 64.3% 4 40.0% 12 52.2% 0 100.0 % .0% 2 22.2% 3 21.4% 4 40.0% 7 30.4% 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 0 .0% 2 22.2% 2 14.3% 2 20.0% 4 17.4% 0 .0% 3 33.3% 5 35.7% 2 20.0% 14 60.9% 1 100.0 % 4 44.4% 7 50.0% 6 60.0% 5 21.7% Q1 0 Q1 1 Q1 2 Q1 3 Q1 4 141 Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt 0 .0% 0 .0% 2 14.3% 1 10.0% 1 4.3% 0 .0% 4 44.4% 3 21.4% 2 20.0% 11 47.8% 0 .0% 3 33.3% 5 35.7% 3 30.0% 5 21.7% 1 100.0 % 2 22.2% 4 28.6% 4 40.0% 6 26.1% 0 .0% 0 .0% 0 .0% 1 10.0% 1 4.3% 1 100.0 % 1 11.1% 4 28.6% 1 10.0% 5 21.7% 0 .0% 4 44.4% 7 50.0% 4 40.0% 12 52.2% 0 .0% 4 44.4% 3 21.4% 4 40.0% 5 21.7% 0 .0% 0 .0% 0 .0% 1 10.0% 0 .0% 0 .0% 1 11.1% 2 14.3% 1 10.0% 5 21.7% 1 2 22.2% 6 42.9% 4 40.0% 8 34.8% 0 100.0 % .0% 6 66.7% 6 42.9% 4 40.0% 10 43.5% 0 .0% 0 .0% 1 7.1% 2 20.0% 0 .0% 1 100.0 % 1 11.1% 3 21.4% 1 10.0% 3 13.0% 0 .0% 3 33.3% 7 50.0% 5 50.0% 14 60.9% 0 .0% 5 55.6% 3 21.4% 2 20.0% 6 26.1% 0 .0% 1 11.1% 0 .0% 1 10.0% 2 8.7% 1 100.0 % 1 11.1% 2 14.3% 4 40.0% 8 34.8% 0 .0% 5 55.6% 7 50.0% 4 40.0% 10 43.5% 0 .0% 2 22.2% 5 35.7% 1 10.0% 3 13.0% Q1 5 Q1 6 142 Not impotan t Little importa nt Importa nt Very Importa nt Not impotan t Little importa nt Importa nt Very Importa nt 1 100.0 % 0 .0% 0 .0% 1 10.0% 0 .0% 0 .0% 1 11.1% 3 21.4% 2 20.0% 3 13.0% 0 .0% 2 22.2% 7 50.0% 3 30.0% 14 60.9% 0 .0% 6 66.7% 4 28.6% 4 40.0% 6 26.1% 0 .0% 0 .0% 0 .0% 0 .0% 1 4.3% 0 .0% 1 11.1% 2 14.3% 4 40.0% 3 13.0% 0 .0% 5 55.6% 5 35.7% 4 40.0% 14 60.9% 1 100.0 % 3 33.3% 7 50.0% 2 20.0% 5 21.7%