An analysis of the impact of foreign direct investment on Zimbabwe’s economic development (2009 to 2012).

Abstract

This study focuses on foreign direct investment (FDI) and its impact on the economic development of Zimbabwe. Qualitative methods were used in this study where documentary research and interviews were conducted. In-depth interviews with senior officer in the Ministry of Finance and Economic Planning and the Zimbabwe Investment Authority were conducted. Using information provided for period 2009 to 2012, the study proves that FDI is the major driver of economic development in Zimbabwe. Most countries including Zimbabwe, recognise the contribution of FDI to the economic growth and development of a country. Zimbabwe is working constantly to attract FDI in the face of wide competition in the region and Africa as a whole. There are views in favour of FDI and against it. Some argue that FDI leads to economic growth and productivity increases in the economy. Others stress the risk of FDI destroying local capabilities and extracting natural resources without compensating poor countries. There are many benefits that are attributed to FDI inflows and from the study, Zimbabwe has gained benefits like employment creation, revenue collection, Corporate Social Responsibility (CSR) and many others. However, FDI does not go without some negative effects such as conflicts between host and investor country and competition with domestic firms. The closure of some domestic infant companies reveals that competition with foreign corporates is unfair and cannot be sustained. It is necessary that these negative effects are harmonised through policies and strategies of FDI that are integrated into the general economic development and economic policies of the host country. A refinement of some of the policies like indigenisation is needed if Zimbabwe is to be successful in attracting FDI.