Foreign direct investment and economic growth in South Africa during the Covid-19 era
Date
2023-03
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Witwatersrand, Johannesburg
Abstract
Foreign Direct Investment (FDI) has been an essential source of sustainable and inclusive economic growth in South Africa. The need to attract FDI to boost economic growth, create employment opportunities, and supplement domestic expenditure is embedded in South Africa's past and present economic policies and frameworks. FDI can bring numerous benefits to various stakeholders including the host country government, which gains increased tax revenues; local businesses through partnerships and supply opportunities and local communities through improved infrastructure development and access to resources and services.
FDI inflows to South Africa have been volatile over the past decade, with periods of significant inflows followed by downturns. The COVID-19 pandemic had a significant negative impact on the South African economy, leading to a decrease in FDI inflows and a contraction in GDP. This report provides an overview of FDI inflows in South Africa, its contribution to economic growth, and the impact of the COVID-19 pandemic on FDI in South Africa. The report reviews existing literature on the relationship between FDI and economic growth and discusses the factors influencing FDI inflows to South Africa. Furthermore, the report examines the measures implemented by the South African government to attract FDI. To truly promote inclusive and sustainable economic growth the South African government must address the challenges investors face, such as policy uncertainties, regulatory hurdles, and infrastructure limitations. Furthermore, the government must channel efforts into empowering local businesses, improving education and healthcare, and investing in infrastructure that
benefits all citizens. While FDI can bring some advantages, it should not come at the cost of neglecting domestic initiatives that foster self-reliance and equitable development.
The report recommends that the government should promote sectors with high potential for FDI, such as renewable energy, and ensure that FDI contributes to
technology transfer and knowledge sharing with domestic industries. The COVID-19 pandemic has significantly impacted FDI, but the country has the potential to recover and attract long-term FDI in the future
Description
A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in 50% requirement of the requirements for the degree of Master of Management (in the field of Development and Economics). March 2023
Keywords
Foreign direct investments (FDI), Economic growth, COVID-19, South Africa and government, UCTD
Citation
Chigeza, Tinotenda Lina. (2023). Foreign direct investment and economic growth in South Africa during the Covid-19 era [Master’s dissertation, University of the Witwatersrand, Johannesburg]. WireDSpace.