Faculty of Commerce, Law and Management (ETDs)

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Subject: search.filters.subject.Foreign Direct Investment

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    Foreign direct investment and Africa’s social and economic development
    (2020) Rangwaga, Joan
    The study investigates the impact of FDI on social and economic development in Africa. This study analyses panel data for 52 African countries for the period 1990 to 2017 by undertaking a quantitative research strategy. The longitudinal/panel research design was used. Secondary data taken from the African Development Bank Group’s Information Highway Portal was used. The study uses multiple regression models to analyse the impact of FDI on three dependent variables for social and economic development. To estimate the impact of FDI on economic growth, the model will control for some of the standard growth factors such as capital, labour, government expenditure, technology transfer, and inflation/price stability. When running the inequality and poverty regression models, the model will control for other factors such as level of literacy and education, employment and population growth, in addition to the standard growth factors. The findings establish the importance of FDI in economic development, however, FDI did not make significant contribution towards reducing income inequality. The study also establishes the importance of FDI in poverty alleviation. The overall conclusion is that FDI is important to social and economic development. The study recommends that African countries create a favourable investment environment by improving institutional qualities (e.g. lower corruption, lower the number of days it takes to start a business, improve political stability, rule of law etc). The results of this study show that the internal factors (labour and domestic investment) are more effective than the external factors (FDI and technology transfer). FDI inflows should be directed to projects which fit with the host country development strategy and can transform host countries through the transfer of technology, human capital development and increased competition in domestic markets.
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    The impact of mineral resources on foreign direct investment in the Southern African development community: a panel data analysis
    (2020) Nyangoni, Kudzai Kudziyamira
    This study analyses the impact of mineral resources on Foreign Direct Investment (FDI) flows to the Southern African Development Community (SADC) region. Absence of studies linking FDI to mineral resource endowment prompted this study. Therefore, the purpose of this study is firstly, to establish whether mineral resource endowment influences foreign direct investment flows to the SADC region and secondly, to establish the extent to which government institutions improve the impact of mineral resource endowment on FDI flows to the SADC region. The study employs use of generalized methods of moments (GMM) estimation technique to test the impact on FDI of various factors identified by existing literature as having effect on FDI flows. The study suggests that in addition to natural resource endowment, other factors included in the model do influence the movement of FDI. The level of political and legal instability experienced in the SADC region negatively affects FDI inflows. This result infers that SADC member countries should review their legal and political infrastructures so as to attract FDI into their countries. High Inflation rates in SADC region also negatively affect FDI flows to the region. Therefore, in addition to political and legal instability, economic instability in SADC member countries may also deter foreign investors from investing in SADC region. The results also show that trade openness and GDP growth have significant effect on FDI flows into the region. Other than mineral resource endowment, all other factors are within the control of SADC state governments. Instituting the right policies can go a long way in creating the right environment to attract FDI flows to the SADC region. The results of the study may not be applicable to SADC member countries only. Therefore, a research with a larger sample of African countries might reveal more interesting features.