policy-briefing-44-92ba64b566c20450.pdf

This policy briefing by the South African Institute of International Affairs examines the impact of Foreign Direct Investment (FDI) on South Africa, arguing that FDI does not automatically guarantee economic growth or job creation. The author suggests that the government should prioritize public investment in economic infrastructure and industrialization over the mere attraction of FDI, particularly in sectors like retail where large foreign entities may displace local businesses.

• Foreign Direct Investment (FDI) flows into South Africa experienced a significant decline in 2010, with a decrease of more than 70% compared to 2009, and cross-border mergers and acquisitions falling by 6.5% in the same period.
• While FDI is often viewed as beneficial for human capital development, market access, and productivity, empirical evidence suggests it does not always lead to economic growth or the creation of decent jobs. Some research indicates a positive correlation between FDI and growth in manufacturing, but not in the primary and services sectors.
• The author argues that FDI in the retail sector, specifically citing the example of Walmart, can be harmful by displacing local manufacturers through massive imports and pushing out small economic players via predatory pricing.
• South Africa's FDI has primarily consisted of portfolio investments and mergers and acquisitions, with significant flows occurring mainly during the privatisation of state-owned enterprises, rather than through greenfield investments.
• To attract sustainable FDI and increase economic confidence, the author recommends that the public sector invest in high-standard economic infrastructure, including roads, rail for transport to other African regions, and world-class ports of entry.
• The briefing proposes several interventions to promote industrialisation: introducing policies to inspect imported goods in the country of origin to combat customs fraud, entering into voluntary export restraint agreements for strategic sectors under the Industrial Policy Action Plan (IPAP), and implementing employee share ownership schemes to link worker benefits to investment proceeds.

APA

South African Institute of International Affairs (n.d.). policy-briefing-44-92ba64b566c20450.pdf. https://saiia.org.za/wp-content/uploads/2012/02/Policy-Briefing-44.pdf

Chicago

South African Institute of International Affairs. policy-briefing-44-92ba64b566c20450.pdf. n.d. https://saiia.org.za/wp-content/uploads/2012/02/Policy-Briefing-44.pdf.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=policy-briefing-44-92ba64b566c20450.pdf |url=https://saiia.org.za/wp-content/uploads/2012/02/Policy-Briefing-44.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairsndpolicybriefing4492ba64b566c20450pdf, author = {{South African Institute of International Affairs}}, title = {{policy-briefing-44-92ba64b566c20450.pdf}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2012/02/Policy-Briefing-44.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }