The Contribution of foreign direct investment on the manufacturing sector output growth in Zimbabwe (1980-2012)
- Author
- Ncube, Arantha
- Title
- The Contribution of foreign direct investment on the manufacturing sector output growth in Zimbabwe (1980-2012)
- Abstract
-
Zimbabwe has been attracting foreign direct investment since gaining independence in an effort to enhance employment rates, output growth, GDP, and poverty reduction in the economy. The major purpose of this study is to determine the contribution of foreign direct investment on the manufacturing sector output in Zimbabwe from 1980 to 2012, and to determine whether this FDI has contributed positively or negatively on the manufacturing sector output growth. Inflation, trade openness, external debt, exports, and FDI were used as explanatory factors. The study was conducted using secondary sources, and time series data was obtained from 1980 to 2012. To study the nature of the link between the fore mentioned variables, the research approach was created with the use of a carefully constructed linear regression model using the Ordinary Least Squares (OLS) multiple regression method. The regression model's conclusion demonstrates that there is a negative link between manufacturing output growth and foreign direct investment, which is consistent with the findings of the authors Maliwa and Nyambe (2015) for the country of Zambia.
This study also highlighted that there are many factors which may enhance or detract the potential of FDI to promote growth in many nations which was explained with the theories in chapter 2. The locational variables of the eclectic theory by Dunning (2001) asserts that social, political and economic factors possessed by the host country are the main factors which allow or limit the inflows of FDI in to the host country. Therefore the study suggested that the host country should have push factors which attract foreign investors .
This study also concluded that, exports and trade openness have a positive relationship with manufacturing sector output growth. As a result this study suggested in Chapter 5 that the government of Zimbabwe create policies that are consistent and obvious in order to make Zimbabwe a safe investment destination. It was also suggested that the government consider the constantly repeating external debt problem, as well as advocate measures that preserve low inflation rates in order to stimulate manufacturing sector output growth. The study recommends that the government reconsider its current trade and investment policies in an effort to attract more foreign direct investment into the country and as well as controlling spill over channels to boost the nation’s absorptive capacity, capital formation and productivity so as to achieve higher levels of industrial growth and manufacturing sector output. - Date
- June 2022
- Publisher
- BUSE
- Keywords
- Foreign direct investment
- Linear regression model
- Manufacturing sector output
- Supervisor
- Dr T. Kairiza
- Item sets
- Department of Economics
- Media
-
Arantha Ncube.docx