Law and Investment in Africa

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Simplice A. Asongu

Abstract

Contrary to mainstream consensus on the dominance of English common law countries in investment prospects, this paper sets a new tone in the legal origins debate by providing empirical validity on the dominance of French civil law countries in private investment. This assessment is based on 38 African countries for the period 1996-2007. The law mechanisms of regulation quality and rule of law are used to investigate how legal origins (French, English, French sub-Saharan, Portuguese and North African) have influenced a plethora of investment dynamics (domestic, foreign, private and public). The dominance of French civil law countries in prospects for private investments could be traceable to their relatively low and stable inflation rates due to common monetary policies.

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