The Impact Of Foreign Direct Investment On Economic Growth And Development In Zimbabwe. (2000-2022) · Electronic Theses and Dissertations

Author

MUZENGEZA NIGEL

Title

The Impact Of Foreign Direct Investment On Economic Growth And Development In Zimbabwe. (2000-2022)

Abstract

The study investigates the impact of Foreign Direct Investment on economic growth and development in Zimbabwe. It was for the period 2000 to 2022 using secondary data through regressing it with the ordinary least square (OLS) and analysing the findings. The regression analysis was used to estimate the relationship between FDI and GDP, and other variables, trade, inflation, unemployment and government expenditure. Research results indicated that FDI and GDP has positive relationship, this suggests that FDI inflows into the country cause economic growth through capital accumulation, technology transfer and market development. This indicates a positive relationship between FDI and GDP.
Inflation has a negative impact on GDP in Zimbabwe. The inflation coefficient of -0.014392 shows that there is an inverse relationship between GDP and inflation. This implies that a 1% increase in inflation will cause a 0.014392% decrease in GDP. Increase in inflation reduces purchasing power of consumers leading to erosion of real income, uncertainty and adverse effects on investment and financial markets. Government expenditure has a positive effect on GDP, this suggests that government spending increases economic growth through multiplier effects, increased productivity and overall well-being of people. Unemployment has a positive relationship on GDP, this may be as a result of high mechanisation in the country in which people are being substituted for machines. Trade has a positive relationship on GDP, this suggests that Zimbabwe imports more than exporting which shows that business environment in the country was not favourable for investors. It signified an inverse relationship that FDI inflows increases GDP in Zimbabwe.

Date

JUNE 2024

Publisher

BUSE

Keywords

Foreign Direct Investment

Economic Growth

Supervisor

Dr Nkala