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Southern Engines of Global Growth$
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Amelia U. Santos-Paulino and Guanghua Wan

Print publication date: 2010

Print ISBN-13: 9780199580606

Published to Oxford Scholarship Online: May 2010

DOI: 10.1093/acprof:oso/9780199580606.001.0001

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Foreign Direct Investment and Trade in the Southern African Development Community

Foreign Direct Investment and Trade in the Southern African Development Community

Chapter:
(p.263) 11 Foreign Direct Investment and Trade in the Southern African Development Community
Source:
Southern Engines of Global Growth
Author(s):

Henri Bezuidenhout

Wim Naudé (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199580606.003.0011

This chapter uses a modified gravity model to estimate the relationship between trade and foreign direct investment (FDI) in the Southern African Development Community (SADC). The chapter finds evidence of a significant causal relationship from SADC's exports to inward FDI. Distance (reflecting remoteness and transport costs) and political instability are confirmed to be significant determinants of FDI to SADC. The chapter discerns differences in the patterns and determinants of FDI to SADC, whether it is from the USA and UK or from continental Europe. In the case of FDI to SADC from the USA and UK, it is exports from SADC to these countries that are significant, and not imports, while in the case of continental Europe both exports and imports are significantly associated with FDI to SADC.

Keywords:   exports, foreign direct investment, gravity model, SADC, South Africa

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