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The Impact of Foreign Direct Investment on Economic Growth: The Case of Zimbabwe (2009- 2012)

Received: 16 September 2013     Published: 10 November 2013
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Abstract

This paper analyzes the impact of Foreign Direct Investment on GDP in Zimbabwe, post dollarization period. Foreign Direct Investment has very significant positive impact on economic growth. I advocate for policies that promote inward FDI if our country is to meet its economic growth targets. The paper also analyses the impact of other macro economic factors on Gross Domestic product. Government Expenditure and Private Investment is found to have significant and positive impact on Gross Domestic Product. Factors that are found to affect GDP negatively are increases in Inflation and Interest Rates. The Zimbabwean data was inconclusive on the impact of two factors on Economic Growth, Which is External Debt and Net Exports; this merits further research because it is not in line with the theoretical predictions.

Published in International Journal of Economics, Finance and Management Sciences (Volume 1, Issue 6)
DOI 10.11648/j.ijefm.20130106.19
Page(s) 323-329
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2013. Published by Science Publishing Group

Keywords

Foreign Direct Investment, Gross Domestic Product, Inflation, External Debt, Net exports, Private Investment

References
[1] Amaoteng, K and Amoako-Adu, B. (1996)."Economic growth, export and external debt causality: The case of African countries". Chapman and Hall: Applied Economics, vol. 28, pp. 21-27
[2] Badawi, A. A. (2003) "Private Capital Formation and Public Investment in Sudan: Testing the Substitutability and Complementarities Hypotheses in a Growth Framework", Journal of International Development, Vol.15, No. 6,pp.783-799.
[3] Balasubramanyam, V.N, Salisu, M., and Sapsford, D., (1996) Foreign Direct Investment and Growth in EP and IS countries, Economic Journal, 106, 92-115.
[4] Bayai, I. and Nyangara, D. (2013) An analysis of determinants of private investment in Zimbabwe for the period 2009-2011, IJEMS, vol.2, No.6, 2013
[5] Bitten-Court, M. (2010) Inflation and Economic growth in Latin America: Some panel time series evidence, University of Pretoria.
[6] Boreinsztein, E.J. and Gregorio, J.E (1998), How does foreign direct investment affect Economic growth " Journal of International Economics 45, : 115-135.
[7] Bloomstom, M., Lipsey R.E., and Zegan M (1992), "What Explains Developing Country Growth?" National Bureau of Economic Research Working Paper, Vol 9, February, pg 4132.
[8] Claessens, S. C. (1990) The Debt laffer curve: Some Empirical Estimates. World Development, Vol. 18 No. 12
[9] Clarke, D. G., (1980) Foreign Companies and International Investment in Zimbabwe. Catholic Institute of International Relations, London.
[10] Dickey, D and Fuller, W (1979), "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit root" Econometrica, 49, 1057-1077.
[11] Elbadawi, A. I., J. B. Ndulu., and N. Ndung'u (1996), "Debt overhang and economic growth inSub-Saharan Africa". A paper presented to the IMF/World Bank conference on External Financing for Low Income Countries in December
[12] Findlay, R, (1978) Relative backwardness, foreign direct investment and the transfer of technology. A simple dynamic model, Quarterly Journal of Economics, 92, 1-16.
[13] Greyhill Advisors (2011). US FDI and Site Selection. http://greyhill.com/2011/10/13/us-fdi-and site-selection.html.
[14] Gwenhamo, F. (2009) Foreign Direct Investment in Zimbabwe. The role of Institutional factors, August 17, 2009. ERSA Working Paper 112, Economics Research Southern Africa, Cape Town.
[15] Hirschman, A. (1958) The strategy of economic development. New Haven; Yale University Press.
[16] Jechere, P. (2011) Investment and Growth Relations. An empirical assessment in Zimbabwe, University of Zimbabwe, International Journal of International Business and Cultural studies.
[17] Mankiw N. G (1992) Acontribution to the empirics of economic growth. The quarterly journal of economics 107(2), 407
[18] Pavin C (1953) Full capacity vs full employment Growth; Quartely Journal of economics, vol. 67(4), pp 545 - 552
[19] Rodriguez – Clare, A. (1996). "Multinational linkages and Economic Development." American Economic Review 86: 852 – 878
[20] Tinbergen J (1942) Zur theories der langsfristigen wirschaft sent wicklung" weltwirtschaftliches Archiv vol. 55, p. 511 -49. Translatedn1959 in L. H Klaassens, L. M. Koyok and H. J Witteveen, editors. Jan Tinbergen, Selected papers. Amsterdam.
[21] Tobin, J (1955) A dynamic aggregative model, Journal of political economy, vol 63(2) pp 103 -15.
[22] Tomas, H. and Zuzara, I. (2011). Determinants of horizontal spillovers from FDI. Evidence from a large meta-analysis, "working paper 2011/07, Czech National Bank, Research Department.
[23] UNCTAD, 1999, " Trends in international investments agreements: An overview", UNCTAD Series on issues in international investments Agreements.
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    Tinomuonga Moyo. (2013). The Impact of Foreign Direct Investment on Economic Growth: The Case of Zimbabwe (2009- 2012). International Journal of Economics, Finance and Management Sciences, 1(6), 323-329. https://doi.org/10.11648/j.ijefm.20130106.19

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    ACS Style

    Tinomuonga Moyo. The Impact of Foreign Direct Investment on Economic Growth: The Case of Zimbabwe (2009- 2012). Int. J. Econ. Finance Manag. Sci. 2013, 1(6), 323-329. doi: 10.11648/j.ijefm.20130106.19

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    AMA Style

    Tinomuonga Moyo. The Impact of Foreign Direct Investment on Economic Growth: The Case of Zimbabwe (2009- 2012). Int J Econ Finance Manag Sci. 2013;1(6):323-329. doi: 10.11648/j.ijefm.20130106.19

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  • @article{10.11648/j.ijefm.20130106.19,
      author = {Tinomuonga Moyo},
      title = {The Impact of Foreign Direct Investment on Economic Growth: The Case of Zimbabwe (2009- 2012)},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {1},
      number = {6},
      pages = {323-329},
      doi = {10.11648/j.ijefm.20130106.19},
      url = {https://doi.org/10.11648/j.ijefm.20130106.19},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20130106.19},
      abstract = {This paper analyzes the impact of Foreign Direct Investment on GDP in Zimbabwe, post dollarization period. Foreign Direct Investment has very significant positive impact on economic growth. I advocate for policies that promote inward FDI if our country is to meet its economic growth targets. The paper also analyses the impact of other macro economic factors on Gross Domestic product. Government Expenditure and Private Investment is found to have significant and positive impact on Gross Domestic Product. Factors that are found to affect GDP negatively are increases in Inflation and Interest Rates. The Zimbabwean data was inconclusive on the impact of two factors on Economic Growth, Which is External Debt and Net Exports; this merits further research because it is not in line with the theoretical predictions.},
     year = {2013}
    }
    

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    AB  - This paper analyzes the impact of Foreign Direct Investment on GDP in Zimbabwe, post dollarization period. Foreign Direct Investment has very significant positive impact on economic growth. I advocate for policies that promote inward FDI if our country is to meet its economic growth targets. The paper also analyses the impact of other macro economic factors on Gross Domestic product. Government Expenditure and Private Investment is found to have significant and positive impact on Gross Domestic Product. Factors that are found to affect GDP negatively are increases in Inflation and Interest Rates. The Zimbabwean data was inconclusive on the impact of two factors on Economic Growth, Which is External Debt and Net Exports; this merits further research because it is not in line with the theoretical predictions.
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Author Information
  • Great Zimbabwe University, Department of Banking & Finance

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