4. Electronic Theses and Dissertations (ETDs) - Faculties submissions

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Subject: search.filters.subject.FOREIGN DIRECT INVESTMENT

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    Investment and Social Conflict in Extractive Industries in Africa: The Case of Cabo Delgado, Northern Mozambique
    (University of the Witwatersrand, Johannesburg, 2024) Magagula, Noncedo; Eyita-Okon, Ekeminiabasi
    Following the rise of an insurgency in the mid-2010s in northern Mozambique, scholars have undertaken the task of exploring the driver of the insurgency considering the different actors including the government of Mozambique and Multinational corporations amongst others. Dominant views on the insurgency have not found a single root cause for the conflict and have settled on a number of causes including the socio economic and socio-political environment in the northern provinces of the country, the discovery and exploration of natural gas by MNCs and religious cleavages. Using a qualitative research approach based on existing sources and literature, this paper investigates the role of foreign investments towards the extraction of natural gas in exacerbating the insurgency in northern Mozambique, Cabo Delgado. It finds that the MNC led developments towards natural gas extraction exacerbated conflict by shining a spotlight on the socio-economic cleavages that have dominated Cabo Delgado throughout the country’s post-independence history. The state and the consortiums neglected the brewing issues in Cabo Delgado, which were years in the making and gave the insurgents ample opportunity to grow into the insurgency that has claimed thousands of lives and halted economic activities in the province.
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    Examining spillover effects and the impact of foreign direct investment in the transport, storage and communication sector
    (2022) Mahori, Nokwanda
    Many studies on the relationship between foreign direct investment (FDI) and indicators of development postulate that FDI leads to economic growth through capital acquisition and diffusion of knowledge. The relationship between FDI and productivity through the generation of spillovers in developing countries remains one of the contemporary issues in international trade literature and has, in recent years, received revived interest, particularly in countries challenged with (i) high unemployment levels; (ii) knowledge and skills deficit in innovation, research and development; and (iii) in the main, lagging with technological progress. FDI benefits to the host economy are not limited to capital acquisition to counter deficiencies and creating jobs in the economy; but include the attainment of intangible assets such as knowledge, skills, managerial competencies, access to international networks, branding and goodwill. FDI presents benefits that, if not taken advantage of, could be forfeited to address capital deficiencies, revive growth, generate employment, transfer skills, and drive technological progress to boost productivity, amongst other benefits. This study examines inward FDI in the transport, storage and communication (TSC) sector. As global economic interdependence is becoming more entrenched, the relevance of this sector and FDI cannot be understated. Leveraging efficient transport and communications networks can lead to opportunities at both the microeconomic and macroeconomic levels that could be forgone if not capitalised. These opportunities include socio-economic development, multiplier effects across different sectors, facilitating market efficiency, and delivering goods and services with more efficacy. This paper explores the relationship between FDI and gross domestic product amongst other variables in the transport, storage and communication (TSC) sector from 1985 to 2018 in South Africa (ZA). The study applies (i) the OLS method to estimate the Cobb-Douglas (CD) production function parameters, the findings are then analysed and interpreted to draw inferences; (ii) the autoregressive distributed lag (ARDL) bounds test to cointegration is applied; and (iii) Granger causality. The OLS method is employed to determine the impact of FDI spillover effects. The bounds test establishes the long-run relationship, and the error correction model (ECM) establishes the short-run dynamic relationships. The study finds that FDI has an insignificant effect on total factor productivity (TFP) in the TSC sector. The vi ARDL bounds approach and Granger causality test indicate a bi-directional relationship between foreign direct investment (FDI) and gross domestic product (GDP). The findings of the long-run relationship, short-run dynamics, and bi-directional causality in this study are on par with the widely held perspective that FDI can positively impact GDP. Moreover, the results indicated that exports, fixed capital formation, and FDI all Granger cause GDP with evidence of reciprocity. At the 5% level of significance, imports, labour, and infrastructure do not Granger cause GDP. This study recommends that attracting FDI is not a means to an end; since attracting FDI does not ensure that spillovers are absorbed by the domestic economy. The FDI policy framework should ideally strike the optimum balance between national socio-economic objectives and FDI policy objectives. South Africa must establish investment policies that: (i) stimulate FDI without threatening the competitiveness and viability of domestic firms; (ii) contribute to economic growth and development; (iii) adhere to established trade practices in multilateral trading systems; and (iv) develop an aggressive FDI strategy.