Determinants of foreign direct investment (FDI) in Zimbabwe

Abstract

The study empirically examined the determinants of foreign direct investment (FDI) in Zimbabwe for the period 1980 to 2018. The objective of the study was to examine the determinants of FDI in Zimbabwe. To achieve this objective, the study used secondary data obtained from World Development Indicators database which was analysed using Ordinary Least Squares (OLS) technique with the help of E views 9. The results obtained show that trade openness, economic growth, policy stability, economic performance of neighbouring countries and gross national expenditure have a positive impact on FDI and urbanization has a negative impact on FDI. However, interest rate, tax and GDP per capita have no impact on FDI in Zimbabwe. However, current real income, Government expenditure and foreign income were found not to have an impact on FDI. From a policy point of view, FDI in Zimbabwe can be improved through implementation of expansionary fiscal policy which stimulates economic growth and encourages increased spending towards infrastructure development. The government should be credible in its policy announcements and implementation to ensure investment policy stability as well as encouraging regional and economic integration with other countries.