Attracting Foreign Direct Investment In Zimbabwe:Determinants And Policies

This paper attempts to examine the determinants and policies on attracting FDI in Zimbabwe-Lessons from China's Experience.Foreign Direct Investment(FDI)plays afundamentalpart in speedy up the development and economic growth of a country.Many developing countries rely seriously on FDI to promote their economy as they face capital deficiency for their development process.According to many scholars,FDI not only brings in capitals and technology,but also skills into developing countries.And these ended up helping the countries to grow faster by satisfying the country's needs.The worrisome downfall of FDI Inflows in Zimbabwe has been caused by many factors include political instability,hyper-inflation,corruption,and many factors.FDI inflows of Zimbabwe started fluctuating from 1980 up to 2017 and this high volatility of Zimbabwe's FDI inflows drew the researchers' attention to examine the factors affecting FDI inflows in Zimbabwe by using the annual data from year 1980-2016.Multiple linear regressions model is applied to study the relationship between explanatory variables(GDP growth,Corruption,Infrastructure Development,Political Instability,Inflation,Government consumption,and Natural resource availability.Empirical results show that Natural Resource Availability significantly and positively affect Zimbabwe FDI inflows.Whilst,GDP growth and infrastructure development affect positively but insignificantly.To the other hand,inflation,corruption and political instability significantly and negatively affect FDI inflows in Zimbabwe.Government consumption affects negatively but insignificantly at all levels.For China,the study looked at FDI trends,sectorial distribution,sources of FDI,regional distribution of FDI,impacts of FDI and policies to attract and determinants of FDI.The determinants for FDI in China were arrived at from review of previous studies.The determinants found were:market size,abundant labor force,political stability,tax incentives,natural resources,trade openness,infrastructural development,exchange rates,and many factors.The study also recommended policies that Zimbabwe should learn from China experience.Political Stability,Anti-Corruption measures are some of the lessons.