The role of government policies on the attraction of Foreign Direct Investment to SADC Countries

Abstract

This dissertation examines the role of government policies in attracting the foreign direct investment (FDI) to SADC countries. To achieve this, the study uses econometric, statistical, and thematic methods within a panel data context and explores means through which SADC countries can attract the FDI. The study covered a panel of 15 SADC countries over the period 1980–2018. FDI is associated with several benefits, particularly in the less developed countries for their investment purposes. However, these less developed countries – including SADC member countries – encounter challenges of attracting FDI despite having abundant natural resources and proposing various regulatory reforms to liberalise their economies. The empirical approach suggested several ways through which a country can attract FDI. The study found that FDI in SADC is not entirely driven by the presence of natural resources but by other determining factors such as the infrastructure development and economic growth, which proved to be paramount in attracting FDI. Therefore, the study recommends that SADC should not only adopt structural policy reforms that potentially improve trade openness, but also adopt strategic infrastructure development.