FAQs on Foreign Direct Investment

This fact sheet from the South African Institute of International Affairs (SAIIA) defines foreign direct investment (FDI), outlines its types and general economic impacts, and details the evolution of South Africa's economic strategies and approach to attracting and regulating inward FDI.

• Foreign direct investment (FDI) is defined as the acquisition of a lasting interest in an enterprise operating outside the investor's country of domicile, typically requiring at least a ten percent stake to ensure an effective say in management.
• FDI is categorized into four main types based on investor motivation: Greenfield investment (new production capacity and employment), Brownfield investment (improving existing facilities), Mergers & acquisitions (inflow of capital without necessarily adding new capacity), and Joint ventures (strategic alliances between foreign and usually local companies).
• While FDI can generate economic growth through employment and linkages with suppliers, its benefit to a host country's economic welfare depends on conditions such as human capital, new technologies, and the ability of domestic businesses to avoid being "crowded out" by foreign competition.
• South Africa is transitioning from a liberal FDI approach based on bilateral investment treaties (BITs) toward a domestic investment regime. This shift aims to maximize domestic benefits, such as fighting unemployment and creating inclusive growth, and includes the Promotion and Protection of Investment Bill released for public comment on 29 October 2013.
• South Africa's FDI has been volatile and lower than comparable developing countries, with inflows between 1994 and 2002 averaging around 1.5% of GDP. As of 2009, the primary FDI sectors were mining (33%), finance (27%), and other services (11%), with significant investments from the United Kingdom, China, and India.

APA

South African Institute of International Affairs (2015). FAQs on Foreign Direct Investment. https://saiia.org.za/news/faqs-on-foreign-direct-investment/

Chicago

South African Institute of International Affairs. FAQs on Foreign Direct Investment. 2015. https://saiia.org.za/news/faqs-on-foreign-direct-investment/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=FAQs on Foreign Direct Investment |date=6 April 2015 |url=https://saiia.org.za/news/faqs-on-foreign-direct-investment/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2015faqs, author = {{South African Institute of International Affairs}}, title = {{FAQs on Foreign Direct Investment}}, institution = {South African Institute of International Affairs}, year = {2015}, month = apr, url = {https://saiia.org.za/news/faqs-on-foreign-direct-investment/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }