Foreign Direct Investment and Economic Growth in the Southern African Development Community

Abstract

The Southern African Development Community (SADC) has continued to experience an unprecedented increase in foreign direct investment (FDI) inflows for the past three decades. Evidence of their quantitative impact on the economy is still quite mixed. We use panel data methods on data from the (SADC) for the 1980–2020 period, where our results show that FDI has a positive and statistically significant effect on economic growth; thus, agreeing with some work that has been done on the community and in Sub-Saharan Africa. Our study calls for the development of human capital, the promotion of market liberalization, the improvement of the financial sector and the need for policy measures that prioritize productive investment that is supportive of the local private and foreign sectors; the latter provides positive spillovers to other sectors.