The Determinants of Outward Foreign Direct Investment from ECOWAS

Outward foreign direct investment (OFDI) has become an increasingly important feature of global economic integration, yet the determinants of OFDI from Sub Saharan Africa remain insufficiently examined within the international business literature. Existing research has largely focused on advanced economies and large emerging markets, where institutional environments are relatively stable and outward investment is supported by coherent policy frameworks. Consequently, limited attention has been given to regions such as the Economic Community of West African States (ECOWAS), where institutional quality is uneven, macroeconomic conditions are volatile, and informal mechanisms play a central role in shaping firm behaviour. This thesis addresses this gap by examining the macroeconomic, institutional, and informal determinants of OFDI from ECOWAS economies.The theoretical positioning informed the methodological choices in the study, enabling examination of both structural conditions and the processes shaping OFDI decisions. It also draws on insights from the institution-based view and the relational perspective on emerging market multinationals to examine how firms transform institutional constraints into strategic capabilities. Methodologically, the thesis adopts an explanatory sequential mixed methods design. The quantitative stage employs panel data analysis covering selected ECOWAS economies over the period 1990 to 2023 to assess the influence of macroeconomic conditions and formal institutional quality on OFDI. The qualitative stage consists of in-depth interviews with executives of multinational enterprises, policymakers, and institutional stakeholders, and is used to contextualise the quantitative results and examine informal institutions and relational mechanisms that are not observable in secondary data. The findings indicate that OFDI from ECOWAS is shaped by the interaction of macroeconomic conditions, formal institutional arrangements, and informal mechanisms. While economic growth and trade openness tend to support outward investment, weak institutional effectiveness and limited policy coherence continue to constrain firm internationalisation. The qualitative evidence further shows that firms respond to these constraints by drawing on informal institutions, including trust-based networks, cultural familiarity, and political connections, thereby reducing uncertainty and facilitating cross-border investment. In this context, such relational mechanisms function as ownership advantages, enabling firms to navigate fragmented regulatory environments and to make sense of formal institutional signals.The study contributes to international business theory by extending the application of the extended OLI paradigm to an under researched regional context and by demonstrating the importance of integrating formal and informal institutional perspectives in explaining OFDI. It also contributes methodologically by showing how the use of mixed methods makes it possible to relate structural conditions to the contextual processes through which OFDI decisions are formed in institutionally volatile international business settings. From a policy perspective, the findings offer evidence-based insights for ECOWAS governments and regional institutions seeking to design outward oriented investment frameworks and strengthen the international competitiveness of West African firms within an evolving African integration landscape.