Analysis of FDI into Zimbabwe

Analysis of FDI into ZimbabweUNCTAD (2016) reported that in 2015 FDI inflow to Africa was US$54 billion. However, Zimbabwe solo received a fraction of the FDI at just US$0.7 billion (ibid). Similarily for 2014, 2013, and 2012 FDI trends have been low (ibid). According to the World Bank Group Flagship Report (2017), Zimbabwe is the 161th terra firma to ease doing business with out of 190 contries. It pales in comparrion with its neighboring countries such as South Africa who is ranted at 74 and Botswana at 71 (WBG, 2017). Following the acceptance of the USD in 2009, enthronization has averaged at just 16% of GDP- however this is 17% below the investment rate of 33% of GDP that is required for economic ripening (WBG, 2017). It could be argued that the low FDI patterns be not reflective of Zimbabwes potential. The query paper will study influential factors that encourage FDI inflows into Zimbabwe and those that hinder Zimbabwes economic growth.Aims and Objectives of the StudyThe aims and objectivesof this investigate is to provide its reader with an empirical investigation of FDI into Zimbabwe and an analysis of what determinants are crucial to boost FDI inflows into Zimbabwe.Literature ReviewBekaert et al. (2014) define FDI a occurring when a company from one country makes a significant investment that leads to at least a 10% ownership interest in a firm in another(prenominal) country. Dunning (2002) is accredited for the infamous electic paradigm thereom that is a commom framework for FDI. Dunning (2002) argues that foreign investors are driven in search for location, internalisation and ownership. In addition, foreign investors are attracted to development nations such as Zimbabwe for resources, strategic assets and markets and efficiency. The favoured route for FDI in Southern Africa is for effeciency and resource seeking companies. Sikwila (2015) states that companies interested in efficiency are attracted to growing contries such as Zimbabwe. This is due to the low production and labour costs and trade liberisation. Resource seeking companies are in search of gold and diamonds in Zimbabwe and Botswana. Sikwila (2015) also argues that developing nations rarely, if ever, attract strategic seeking investotrs as they are often behind on technology and innovation due to domestic financial issues. Economic globalization consists of FDI, trade and the transfer of technology and knowledge. Despite the globalisation phenomenon, it is evident that LEDC are yet to reap the rewards particularly in technological advancements (Van de Bank, C. 2010).Emperical LiteratureThere are four frameworks that examine FDI in developing nations. The first concept studies the key factors of FDI in relation to push and pulls factors (Norris, E. et al. 2010). This approach focuses on examining factors such as the firms size, its semblance conditions (interst rates, exchange rates and inflation rates), its five forces with particular attention to export competitiness and other operational and endogenous conditions. These factors either push or pull FDI. The piece concept studies the FDI drivers that are derived externally to investors. Nguyen et al. (2012) classifies these factors into four areas (i) supply side (ii) demand side (iii) institutional. The third concept places FDI determinants into one of three economic groups. The first is the investment climate, secondly, the exchange market policies, and lastly trade (Sekkat et al. K. 2007). The final concept studies FDI in relation to timing, irreversibility, and uncertainty (Ramirez, M. 2006. Lee, C. et al., 2009). Researches provide arguments for the above afromention constructs and will be dicussed in incident in the final look for project.Research DesignMethodologySaunders et al. (2012) suggest that ones approach to research stratergy and implementation is crucial as it determines the results and expectations one desires to achieve. To optimise the results, the research m etholodody will begin by considering each layer of the research onion (Saunders et al. 2012). As the onion layers unravel, the model will offer a clear metholodogy in conducting the research. The research proposes for the variables to be GDP, Inflation, External debt, Trade Openess. The variables computed will all be led by theoretical assumptions and empirical literature. The methodology for the research will be a dominated by qualitative research with minor quantitative approaches (hbgkbgkergbkre). The general equation for the research can be traced to Clarkes (1917) accelerator theory, which was furher developed by Hicks (1951). However, it was Bernake et al. (1988) who observed that the neo classical approach to investment combined with the accelerator theory produced inteprable and accurate results for FDI in developing nations.Data Collection MethodThe research will use secondary data from a variety of enquiry sources thus reducing the risk of biased results. The enquiry sourc es are listed below (not exhausted) qualification Bank of ZimbabweSouth African Development CommunitySouthern African Trade and Investmnet HubWorld Bank GroupWorld Trade OrganisationZimbabwe enthronisation CentreZimbabwe Minsitry of FinanceZimbabwe National Statistics Agency