Southern African Development Community's foreign direct investment and its significance - a systematic review study

Abstract

The study highlights the significance of Foreign Direct Investment (FDI) to the Southern African Development Community (SADC) economies. The first objective focuses on analysing the SADC investment policies pertaining to FDI. FDI instruments available at the regional and national levels are analysed. The study takes an in-depth look at the various activities by Investment Promotion Agencies (IPAs) currently existing for SADC member states (MS). The existing policy instruments are key in attracting FDI and the policy architecture will largely determine the extent to which FDI will flow to different countries. The second objective focuses on reconciling the evidence on the determinants and impact of FDI in the SADC region. Through a systematic literature review, various literature reports pertaining to FDI have been analysed. Journal articles were collected from the UNISA library by means of a standard database search criterion through Scopus, Web of Science and EconLit search engines ranging from 1960 to 2019. The database was built based on known published and unpublished empirical papers for FDI in SADC. Out of the 554 journals investigated, 346 were found to be relevant to the study, with 114 journal articles contributing to the qualitative study. Through its quality assessment, descriptive statistics and qualitative synthesis provided a summary of the samples and measures utilized in a study through the measures of central tendency (mean and median) and dispersion - how spread out the data is (standard deviation). The results showed a higher mean value for general case studies reporting 0.53 with a standard deviation of 0.23. The standard deviations of variables indicated less spread or variability in the data collected over the years of the estimation period 1990 to 2019, indicating the results being more reliable. In conclusion, the study highlights the need to address the investment environment by addressing challenges such as political instability and wide differences in tax incentives.