Journal of Policy Modeling 40 (2018) 647–662 Available online at www.sciencedirect.com ScienceDirect FDI, democracy and corruption in Sub-Saharan Africa Sean Joss Gossel University of Cape Town, Graduate School of Business, Breakwater Campus, Portswood Road, Greenpoint, 8005 Cape Town, South Africa Received 28 December 2017; received in revised form 11 March 2018; accepted 18 April 2018 Available online 7 May 2018 Abstract This paper investigates the relationship between FDI, democracy and corruption among 30 countries in Sub-Saharan Africa (SSA) over the period of 1985–2014 to determine whether the ‘helping hand’ or ‘grabbing hand’ hypothesis is most applicable. The results of GMM analysis show that corruption is used by FDI investors to overcome the region’s weak democratic regulatory and institutional status and thus the ‘helping hand’ is more prevalent. However, the results further show that as democratic capital accumulates, this association may outlive its usefulness and thus corruption as a ‘helping hand’ in time becomes a ‘grabbing hand’ instead. These results imply that SSA countries should focus on integrating into the international economy so as to take advantage of existing financial enforcement legislation while reconstructing and strengthening domestic constitutional anti-corruption legislation and institutions. © 2018 The Society for Policy Modeling. Published by Elsevier Inc. All rights reserved. Keywords: Corruption; Democracy; Democratic capital; Foreign direct investment; Sub-Saharan Africa 1. Introduction Corruption is prevalent in both developed and emerging countries, and has increased with financial globalisation (Petrou & Thanos 2014). Internationally, corruption has been found to have a range of adverse effects 1 while in Sub-Saharan Africa (SSA), corruption has been identified as one of the main reasons why most of the countries in the region are unlikely to achieve their E-mail address: gosselse@gsb.uct.ac.za 1 These include hampering the level of investment and economic growth (Mauro, 1995), the quality of infrastructure and productivity of public investment (Tanzi & Davoodi, 1997; Wei, 1999), the effectiveness of public policy (Ades & https://doi.org/10.1016/j.jpolmod.2018.04.001 0161-8938/© 2018 The Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.