Determinants of Foreign Direct Investment in Southern Africa Development Community (Sadc).pdf

1、Africa has received a substantially low amount of FDI in comparison to the rest of the worlD.The continent only accounts for a minute percentage as a whole. Promoting FDI has become an important aspect of Africa as well

2、as other developing nations，as an instrument to promote economic growth and recognition globally. The paper derives variables to determine what attracts foreign direct investments in SADC using the Location advantage of

3、the O (Ownership) L (Location) I (Internalisation) model. We then use our determinants to empirically analyze by adapting a panel data analysis model with a sample of 14 countries (SADC) over a 22 year time period (1990-

4、2012). The study undertakes fixed effect model as per Hausman test results. The study finds that natural resources，openness to trade，and good level of infrastructure to be significant and positively correlated with FDI i

5、nflows. High levels of inflation have proved to be significant as a deterrent of FDI inflows into SADC. The study also finds a positive relationship between market size and FDI，however the results where insignificant. Fo

6、llowing the results the study can conclude that the main driver of FDI in SADC is the availability of natural resources. Enhanced trade liberalisation through openness to trade is an essential incentive in attracting FDI

7、 within the region. Poor infrastructure can deter investment due to high costs involved and stable macroeconomic conditions play a vital role in determining FDI inflows in SADC. SADC countries have different state of eco