For the past decades, Sub-Saharan Africa has been considered to be one of the poorest region in the world. Countries in this region face a lot of challenges including high unemployment rates, low economic growth, poor economic incentives, poor infrastructure and also depressed private investment to poor institutional support. Zimbabwe is one of the countries in this region that faces all of these issues (Boyes, 2010). In fact, policy makers in this region tend to rely on Foreign Direct Investment as the only policy option to stimulate their economy. To understand the FDI of Zimbabwe, it is import to divide it into two sections. The first one is from 1980s to 2017; during the regime of President Mugabe and the next one is from 2018 to present under the leadership of Emerson Munangagwa.
A report by the World Business organization indicated that since 1980s, Zimbabwe depended on the FDI to play a vital role in the employment creation in the country. It is important to note that through FDI, several private sectors tend to establish various organizations that are likely to create employment opportunities. However, there are various factors that could affect FDI in a country. Looking at Zimbabwe, some of the government policies were a major threat to the advancement of Foreign Direct Investment (Elessa, 2015). President Mugabe had strained relationship with most of the western countries. In that case, most of the leaders from such western countries were not willing to invest in Zimbabwe.
On the other hand, President Mugabe was willing to work without the partnership of the western countries. One of the effects that such a measure had on the country was that the rate of unemployment increased. In addition, it led to the increased rate of insecurity cases which also sacred away some of the local investors. The highest growth rate in Zimbabwe was experienced between 1986 and 1990, and the period was marked by massive import substitution. The main aim of the move was to boost domestic industrialization and create more employment opportunists for the people. The lowest growth of unemployment rate was experienced between 2001 and 2005. During that period, the government had implemented new tariffs that restricted the FDI in the country.
Political instability is also a factor that led to poor FDI in Zimbabwe. From 1980s to 2017, it was indicted that President Mugabe was trying to suppress any political party that was undermining his ideologies. As such, it created a political instability situation within the country which was not favorable for FDI (Drysdale, 2017). In fact, most of the investors preferred to research on other countries that had better opportunities for investing. As much as President Mugabe faced various pressures from the international community, he was not willing to resign. The country experienced the lowest GPD during that period which even made the government to use the US dollar as its currency. The education level within the country had also deteriorated making it unfavorable for investors (Ramamurti, 2011). It is important to note that education system plays an important role in FDI of a country. When people are more educated, it will create a situation in which the society will create favorable environment that would attract the investors. The citizens can also influence the government to enhance such measures that would benefit the majority.
Research Questions
What was the impact of FDI in Zimbabwe between 1980s and 2017?
How can the FDI in Zimbabwe be improved?
The methods of collecting data will include the use of survey since it is a large sample. In that case, different type of surveys should be put in place. For example, the use of online survey can be enhanced to capture more information. In fact, online survey is considered to be more effective since many people will be able to participate. One of the ways of ensuring that the use of online survey is appropriate is through using the social media platforms. Since millions of people around the country have registered to such types of platform, it will create a large sample of people who will participate in the process. Also questionnaires will be used to try and gauge the opinion of the people about FDI in Zimbabwe. Also, it is important to include all the stakeholders to ensure that the results are valid.
Technology plays a major role in the economic growth of any country. Foreign Direct Invest also has an impact on the type of technological advancement in a country. It was reported that within 1986 to 1990, Zimbabwe experienced the lowest production are due to the lack of modern technology. As a result, the economy of the country reduced significantly from the initial 10% to 8% (Froot, 2008). By enhancing FDi in a country, it will ensure that the production rate increased due to various technologies that would be indirect (Havnevik, 2011). The economy of any country must be development by using learn technology that will ensure that the country is able to compete effectively in the global market without such technology, most of the industries in Zimbabwe depend on the local ways of production. In that case, most of the products were sold locally. At some point the government indicted that such measures was a way of protecting the local industries.
Based on the World business organization report, Zimbabwe enhanced a positive economic growth after the new regime took power in Zimbabwe. First, under the leader of President Zimbabwe introduced new policies that allowed investor into the country for the first time in many decades. It was observed that within a few months, the employment is increased with a small margin (Fantu, 2013). Also, based on the economist, Zimbabwe GPD is like to increase in the near future based on the measures that the new government has put in place regarding to Foreign Direct investment. The President is trying to create more employment opportunist for the local people as it one of the ways and enhancing economic growth. Also, the new government of Zimbabwe formed partnership that allowed other western countries to loan the government for them to improve of their infrastructure. Without proper infrastructure, FDI cannot be realized in any country. Gross domestic product per capita is another measure that the current government of Zimbabwe has focused. It is about how the local people will be impacted by FDI to ensure that they also benefit from it. For example, the government has put new measures to ensure security within the country as a way of promoting FDI in Zimbabwe.