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<p>Private investment in Botswana as well as a ratio to Gross Domestic Product has been falling in some periods of 1976-2003. Viewed against the background of growing evidence of a link between investment and economic growth, an inconsistent and downward trend in Botswana's private investment is a matter of concern. Several studies in developing countries emphasize the importance of macroeconomic policy in explaining variations in investment, an in particular, identify the microeconomic determinants of private investment to include interest rates, output growth, public investment, bank credit to the private sector, inflation, real exchange rate, and the level of trade. This study evaluated the macroeconomic determinants of private investment in Botswana by means of a regression analysis based on the co-integration and Error Correction Model of Engle and Granger (1987).</p>

<p>Private investment in Botswana as well as a ratio to Gross Domestic Product has been falling in some periods of 1976-2003. Viewed against the background of growing evidence of a link between investment and economic growth, an inconsistent and downward trend in Botswana's private investment is a matter of concern. Several studies in developing countries emphasize the importance of macroeconomic policy in explaining variations in investment, an in particular, identify the microeconomic determinants of private investment to include interest rates, output growth, public investment, bank credit to the private sector, inflation, real exchange rate, and the level of trade. This study evaluated the macroeconomic determinants of private investment in Botswana by means of a regression analysis based on the co-integration and Error Correction Model of Engle and Granger (1987).</p>

Thesis (MBA)--Stellenbosch University, 2005. / ENGLISH ABSTRACT: FOI has become a very important tool for the socio-economic development in developing countries. Three important factors need to exist before an investor will decide to invest in a foreign country. These factors are the presence of an ownership specific advantage, location advantages in the host country and superior commercial benefits for the investor. In order to detennine the host countries potential to attract FDI was it therefore important to analyse the second factor, which are the country specific advantages. The host country detenninants of UNCfAD and the ideal investment criteria of WAIPA have been combined in order to get a standardized framework for analysis and comparison. The starting point was therefore to analyse the availability of resources within these countries. In Botswana can we see that the diamond mining industry is the largest econOITllC contributor and in Tanzania do we find that their agricultural sector is the biggest economic contributor. In both instances do these countries have to import their oil, seeing that they are not producing their own petroleum products. Tanzania is exploring some opportunities with regard to oil reserves and also offers significant incentives for companies in this instance. In the case of Tanzania are the islands of Zanzibar a large tourist attraction and in Botswana does the Okavango delta offer a variety of tourist attractions. The potential of attracting FDI within these tourist industries is very large with regard to both countries. The domestic market in Tanzania is also much larger compared to that of Botswana and can offer the foreign investor with some great opportunities. Due to the small size of the domestic market in Botswana are they focusing more on export manufacturing and can we also see that their total exports are much larger than that of Tanzania. Exports under AGOA as a percentage of total exports to the US are currently almost double in Botswana compared to Tanzania. Through their membership to the SADe do both these countries have access to the European markets under the EU Free Trade Agreement. The European markets are also the largest markets for export in both cases. Efficiencies with reference to the banking system and physical infrastructure are also better in the case of Botswana. Botswana is rated as having one of the best banking systems in Africa. In order for Tanzania to improve trade within its region will it be important to upgrade their road and rail transport. The lack of skilled labour is a very big problem within both countries. The skill shortage is further worsened by the inefficiency of the education systems in order to address these problems. Electricity and' telecommunication is also very expensive in both countries, but can be addressed if the privatisation process within these sectors are speeded up. The biggest problem that both these countries face though is the significant impact that the HIV/AIDS virus is having and going to have on their current and future development. The tax laws in both these countries are very favorable and we can see that Tanzania and Botswana both have more attractive corporate tax rates than most of the other SADe states. Both countries are aiming at attracting FDI through export manufacturing and this is promoted through incentives such as duty· free imports of raw materials and special tax conceSSIOns. We can therefore see that both these countries have a lot of positive aspects, which will attract the foreign investor. The risk factor in combination with the negative factors will have to be weighed up against the positive factors, but in the end will it be the investor that has to decide which country 's characteristics suites its specific requirements best. / AFRIKAANSE OPSOMMING: Direkte Buitelandse Belegging het 'n belangrike broan geword vir die sosio-ekonomiese ontwikkeling van ontwikkelende lande. Drie belangrike faktore is geidentifiseer wat teenwoordig moet wees alvorens so 'n buitelandse investering sal plaasvind, naamlik 'n eienaar spesifieke voordeel, tuisland liggingsvoordeel asook 'n besondere kommersieIe voordeel. Die liggingsvoordeel verwys na die spesifieke eienskappe van die gasheerland. Vir die doel van hierdie werkstuk wat is om te bepaal wat die potensiaal van die gasheerland is om buitelandse investering te lok, was dit dus belangrik om 'n reeks faktore te identifiseer wat gebruik kan word om as raamwerk van vergelyking te dien. Die gasheerland vereistes soos uiteengesit deur UNCTAD en die eienskappe van WAIPA is gekombineer om hierdie raamwerk te skep. Eerstens word daar dus gekyk na die natuurlike hulpbronne in hierdie twee lande. Nie een van die twee lande beskik oor olie hulpbronne nie en moet al hul olieverwante produktte invoer. Toerisme is 'n groot bron van inkomste en in die geval van Botswana speel die Okavango delta 'n groot roI. In Tanzania is die eilande van Zanzibar weer 'n groot toeriste aantrekking wat nog baie potensiaal vir ontwikkeling bied. Landbou in Tanzanie is die oorheersende ekonomiese aktiwiteit, waar die ontginning van diamante weer die grootse bydraende faktor tot die ekonomie van Botswana is. Tanzanie se plaaslike mark is ook baie groter as die van Botswana en het dus ook baie potensiaal vir ontwikkeling. A.g.v. Botswana se klein plaaslike mark word daar ook meer gefokus op uitvoer vervaardiging. Botswana vaar ook tans beter met die uitvoer van produkte na Amerika onder die AGOA wetgewing en totale uitvoere onder AGOA as persentasie van totale uitvoere na Amerika is bykans dubbel die van Tanzanie. Beide lande is lede van die SADC en geniet dan ook die voordele van die vrye handelsooreenkoms met die Europese Unie wat ook in beide gevalle die grootste uitvoermarkte van hierdie lande is. Onder die effektiwiteitseienskappe kan ons sien dat Tanzanie 'n drastiese verbetering aan hul pad en spoorvervoer netwerke moet aanbring om handel in hul streek te verbeter. Die hoe koste van elektrisiteit en telekommunikasie in beide lande is ook 'n bron tot kommer, maar kan beter aangespreek word indien die privatiseringsproses in hierdie sektore versnel word. Een van die grootste faktore wat ook dringende aandag in beide die lande sal moet geniet is die groot tekort aan 'n opgeleide werkerskorps. In beide gevalle sal die onderwysstelsels drastiese veranderings moet aanbring om hierdie probleem aan te spreek. Die rol wat HIV/VIGS speel m.b.t. lewenskwaliteit in hierdie lande is ook 'n bron van kommer wat die huidige en toekomstige ontwikkeling van hierdie lande gaan beinvloed. Korporatiewe belasting in beide lande is beter as in meeste van die ander SADC state. Die feit dat beide lande fokus op die uitvoervervaardigingsmark is daar baie goeie aansporingsinisiatiewe om die belegger te lok, soos bv. geen doeane tariewe op die invoer van rou produkte nie, in kombinasie met spesiale belasting toegewings. Dit is dus duidelik uit hierdie werkstuk dat elke land verskeie positiewe asook negatiewe aspekte het. Die uiteindelike keuse sal op die skouers van die belegger berus nadat aIle voor en nadele teen mekaar opgeweeg is oor watter land die beste aan sy spesifieke vereistes voldoen.

Thesis (MBA)--Stellenbosch University, 2002. / ENGLISH ABSTRACT: The study project was aimed at analysing the factors that account for the difference and intensity with regard to the attraction of FDI inflows by developing countries and the benefits brought about by this FDI. It is believed that economic growth can only be achieved where there are no barriers to trade. Trade liberalisation forms the central part of the structural adjustment programmes advocated by the international financial institutions, the World Bank and IMF. The theory of comparative advantage lies at the heart of trade. There is a strong belief that countries will benefit more when specialising in producing goods and services in which they are efficient, those that they can produce at lower costs than other countries. However, researchers like Madeley, (2000:50) argue that the benefits of free trade can only be realised if trade takes place between countries at equal levels of economic development. This is true when one takes into account the fact that developing countries are not well equipped to cope with more developed countries and when looking at the intensity of trade in both cases, With trade liberalisation and competitive global economy, the developing countries are forced to turn to multinationals because there is hope that through them they can benefit from global trade and be able to compete for the limited resources. It is only through the attraction of foreign direct investment or by influencing the location decisions of multinationals that countries can achieve sustainable economic growth. This is so because globalisation and trade liberalisation have concentrated the power of trade in the hands of the multinationals. Multinationals have advantages in global trade because they possess distinct / superior assets which enable them to compete well in the global market. These assets include efficient production processes and continuous process improvements, the ability to eliminate unnecessary process steps, they enjoy economies of scale because of mass production and standardisation, they possess managerial and marketing skills and they can obtain less expensive financial resources because of their credit worthiness. The use of advanced technology by multinationals gives them the power and advantage in the sense that they can achieve high levels of quality in terms of consistency in production and timeliness. Multinationals have built strong relationships with suppliers, banks and other organisations in different fields, world wide. It is, however, noted that developing countries continue to face problems and challenges with regard to the attraction and maintenance of foreign direct investment because these multinationals favour countries where they are sure that their investments will get sustainable future returns. It is, however, imperative that developing countries position themselves advantageously when competing for FDI. In light of this, some developing countries have opted to enhance their fitness and abilities through the promotion of regional integration and cooperation among themselves and neighbouring countries, for purposes of complementing each othe~'s weaknesses and working together towards achieving common goals. The factors which contribute to the attraction of foreign direct investment include: • Rigorous basic education system plus provision of appropriate education. • Size of the economy and the market. • Cost and quality of local inputs. • Governance, political stability and stable macroeconomic policy. • Infrastructure (telecommunication, roads and the internet). When analysing Botswana, it was noted that the country relies heavily on the mining sector as the major source of foreign direct investment and economic growth. The country needs to diversify the industrial base away from mining. The government needs to pay attention to the factors which deter FDI investment in Botswana. / AFRIKAANSE OPSOMMING: Die studieprojek het ten doel die ontleding van die faktore wat verantwoordelik is vir die verskil en intensiteit in die aanlok van invloeie van buitelandse direkte belegging (BDB) deur ontwikkelende lande en die voordele wat deur hierdie BDB teweeggebring word. Daar word beweer dat ekonomiese groei net bewerkstellig kan word wanneer handel nie belemmer word nie. Die liberalisering van handel maak die kern uit van die strukturele aanpassingsprogramme wat deur die internasionale finansiële instansies, die Wêreldbank en IMF, voorgestaan word. Die teorie van vergelykende voordeel is die kern van handel. Daar word geglo dat lande meer sal baat indien hulle spesialiseer in die produksie van goedere en dienste waarin hulle bedrewe is en wat hulle teen laer koste as ander lande kan produseer. Navorsers soos Madeley, (2000:50) beweer egter dat die voordele van vryhandel net verwesenlik kan word indien handel plaasvind tussen lande met dieselfde vlak van ekonomiese ontwikkeling. Dit is wel die geval wanneer 'n mens die feit in ag neem dat ontwikkelende lande nie goed toegerus is om met meer ontwikkelde lande mee te ding nie en wanneer 'n mens na die intensiteit van handel in albei gevalle kyk. Met die liberalisering van handel en mededingende wêreldekonomie word ontwikkelende lande genoop om hulle tot multinasionale maatskappye te wend in die hoop dat hulle sodoende voordeel kan trek uit internasionale handel en om die beperkte hulpbronne kan meeding. Slegs deur buitelandse direkte belegging te lok of deur die besluite oor die ligging van multinasionale maatskappye te beïnvloed kan lande volhoubare ekonomiese groei bewerkstellig. Dit is so omdat globalisering en die liberalisering van handel die handelsmag in die hande van die multinasionale maatskappye geplaas het. Multinasionale maatskappye geniet voordele in wêreldhandel omdat hulle bepaalde / superieure bates het wat hulle in staat stel om mededingend te wees in die wêreldmark. Hierdie bates sluit in doeltreffende produksieprosesse en deurlopende prosesverbeteringe, die vermoë om onnodige prosesstappe uit te skakel, die feit dat hulle skaalbesparings geniet danksy massaproduksie en standaardisering, bestuurs- en bemarkingsvaardighede besit, en goedkoper finansiële hulpbronne kan bekom danksy hul kredietwaardigheid. Multinasionale maatskappye se gebruik van gevordere tegnologie verleen aan hulle die mag en voordeel in dié opsig dat hulle hoë vlakke van gehalte in terme van konsekwentheid van produksie asook tydigheid kan bereik. Multinasionale maatskappye het sterk verhoudings met verskaffers, banke en ander organisasies op ander gebiede wêreldwyd opgebou. Ontwikkelende lande staan egter steeds voor probleme en uitdagings rakende die aanlok en behoud van buitelandse direkte belegging, aangesien hierdie multinasionale maatskappye ten gunste is van lande waar hulle seker is hulle beleggings volhoubare toekomstige opbrengste sal oplewer. Dit is egter noodsaaklik dat ontwikkelende lande hulself voordelig posisioneer wanneer hulle om BDB meeding. In die lig hiervan het sekere ontwikkelde land besluit om hul geskiktheid en· vermoë te verbeter deur die bevordering van gebiedsintegrasie en samewerking tussen hulle en buurlande met die doel om mekaar se swakhede aan te vul en saam te werk om gemeenskaplike doelwitte te bereik. Die faktore wat bydra tot die lok van buitelandse direkte belegging is onder meer: • 'n Streng basiese onderwysstelsel plus voorsiening vir behoorlike opvoeding. • Die grootte van die ekonomie en die mark. • Koste en gehalte van plaaslike insette. • Regering, politieke stabiliteit en stabiele makro-ekonomiese beleid. • Infrastruktuur (telekommunikasie, paaie en die internet). Met die ontleding van Botswana is daarop gelet dat die land baie afhanklik is van die mynbousektor as die belangrikste bron van buitelandse direkte belegging en ekonomiese groei. Die land moet die nywerheidsbasis weg van mynbou diversifiseer. Die regering moet aandag gee aan die faktore wat BDB in Botswana verhinder.

Foreign Direct Investment (FDI) flows into South Africa have been very low for several decades, and this research examines the reason(s) why this has been the case since 1994. There is a common belief amongst economists that there is a positive relationship between the amount of FDI received and economic growth, thus the desire to attract greater FDI inflows. A literature review was conducted to establish the determinants of FDI globally and then data were collected and assessed to test which causes are most important. The performance of developing nations in attracting FDI was first compared with that of the developed nations. Thereafter, a regional breakdown of FDI flows was presented, with a particular focus on the Southern African region. FDI inflows to South Africa since 1994 were compared against the identified determinants of FDI, as well as with FDI inflows into two other major mining economies, Chile and Botswana. The friendliness of the government towards business was identified as a significant determinant of FDI inflows and the importance of this factor in explaining FDI inflows into environment in South Africa was looked at in more depth. It was found that many investors perceive the South African government as hostile towards business and as corrupt and/or inefficient. The empirical results show that this negative perception helps explain the FDI inflows attracted by South Africa since 1994. Therefore, increased friendliness to business by the government should increase future inward FDI flows into South Africa.