| The major objective of this research was to examine the economic and non-economic factors that determine foreign direct investment decisions of the U.S., U.K., and FRG MNCs in South Africa. Also, the study identified some similarities and differences between these factors in their determination of the level of foreign direct investment decisions of the U.S., U.K., and FRG MNCs in the country of interest. Lastly, the research determined the most statistically significant variable or a combination of variables that influenced the investment decisions of the three investor countries in South Africa.; In order to carry out the analyses, three null hypotheses were developed to test the level to which these factors become integral parts of U.S., U.K., and FRG MNCs foreign direct investment decisions in South Africa. To test the hypotheses, three different statistical methodologies were combined to examine Financial, Political, and Market indexes for each investing country. First, the Principal Components Technique was used to transform the numerous observed variables in the study into a more manageable number of uncorrelated components by reducing the dimensionality of the variables. This initial approach is fundamentally descriptive. Second, the variables were factor analyzed for regrouping based on communality of response. The exploratory analysis resulted to Financial generated (FIN), Market generated (MAR), and Political (POL) factors.; The associated statistics of Multivariate Analysis of Variance (MANOVA) identified the differences between these factors. Cross-tabulation statistics of group means and those of the standardized discriminant canonical weights applied over the three groups of U.S. (High), U.K. (Medium), and FRG (Low), foreign investment countries in South Africa ranked Exchange rate movements the most statistically significant single determinant of the U.S. MNCs level of decisions to invest in that country. In a two-way interaction analysis, the variable was equally statistically significant to the West German MNCs but not to the U.K. MNCs.; These cross-tabulation statistics of group means also confirmed that no single market-generated variable was statistically significant between the U.S., U.K., and West German MNCs investment decisions in South Africa. Contrary to what some investors perceive as market oriented economy, the finding seems to indicate that the U.S., U.K., and FRG MNCs do not consider South Africa a market economy.; In conclusion, there are significant differences between the level of foreign direct investment decisions of the U.S., U.K., and FRG MNCs in South Africa. Market and political strategic motives of foreign direct investment do not appear to predict FDI decisions in the Republic of South Africa. Instead, the findings suggest that the level of MNCs decisions to invest in that country may be based on financial considerations rather than strategic motivations, especially for U.S. and FRG MNCs. |
