3. Electronic Theses and Dissertations (ETDs) - All submissions

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Should South Africa have an FDI policy? : a critical analysis of South Africa's current policy stance
(1998) Cohen, Richard
The purpose of this paper is to provide a critical assessment of the Foreign Direct Investment (FDI) policy stance in South Africa. We analyse whether investment incentives will be effective in increasing FOI inflows and look at the importance of the behaviour of transnational corporations (TNCs) in determining the impact of FDI on the host. This analysis allows us to determine the appropriate objective of FDI policy, namely channelling TNC behaviour' such that they generate the desired benefits for the host-This raises the question of how such behaviour may be channelled in practice. Using the framework of information economics, we identify the nature of the difficulties with which policy makers must deal in designing behavioural incentives. Although this does not lead us directly to policy prescriptions, when augmented with practical considerations, it provides us with a basis for analysing whether FDI policy (as distinct from industrial policy) is called for by isolating one instance in which a differentiated approach. would be likely to increase the efficacy of policy, we show that there is good reason to suspect that the absence of a distinct FDI policy in South Africa may be suboptimal.