There are four dependent variables, three flows to the private sector and one to the public (and publicly guaranteed) sector (see Table 1 for descriptive statistics):
Foreign direct investment net inflows per capita - equity ownership of a substantial share (10% or more) of an enterprise.
Portfolio equity net inflows per capita - equity ownership of an insubstantial share (less than 10%) of an enterprise
Total net inflows per capita from private creditors to nonguaranteed private enterprises – includes bonds, loans from commercial banks, and other
Total net inflows per capita from private creditors to public or publicly guaranteed institutions – includes bonds, loans from commercial banks, and other
In order to compare across years, I use per capita constant US$ for all measures.8 I use net inflows to capture both investment and divestment decisions. In order to compare across countries, I use inflows per capita, which is common (Chakrabarti 2001) although not universal and seems most appropriate for the goals of this project. A primary motive for domestic governments to attract capital is to create jobs and other benefits for supporters in order to continue to hold office. Even in countries where the ruler does not rely on popular support, population matters in the sense that more soldiers will be required to repress any potential uprisings. An exception that is common in Africa is “enclave economies” (Leonard and Strauss 2003), in which the government survives by controlling some natural resources that have low labor or infrastructure requirements. I deal with this in two ways. First, I drop countries whose populations average below one million during the period studied – these include some of the most extreme enclave economies such as Gabon, Equatorial Guinea, and Guinea-Bissau.9 Second, I interact the two explanatory variables of interest, regime type and economic strategy, with a measure of the prominence of natural resource extraction in the economy (see below).
The largest flow over the entire period is FDI per capita, which averaged over $11 per capita per year for the entire period for countries with average populations over one million and peaked in the late 1990s. The second largest is credit to the public sector per capita, which averaged over $3 per capita per year over the entire period and peaked in the 1970s. Portfolio equity and credit to the private sector totaled less than $1 per capita annually over the entire period, although portfolio equity rose to high levels in the late 1990s (mostly to South Africa).