Foreign Direct Investment and Trade in the Southern African Development Community

Henri Bezuidenhout () and Wim Naudé

No RP2008-88, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: We use a modified gravity model to estimate the relationship between trade and foreign direct investment (FDI) in the Southern African Development Community (SADC). We find 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. We discern differences in the patterns and determinants of FDI to SADC, whether it is from the USA and UK or from continental Europe.

Keywords: International trade; Foreign investments; Social stability; Transportation cost (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-afr and nep-dev
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Citations: View citations in EconPapers (3)

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