Thesis (MDF)--Stellenbosch University, 2015. / ENGLISH ABSTRACT: This study examined the causal relationship between foreign direct investment and domestic savings in Zambia. Data over the period 1970–2012 was extracted from the World Development Indicator and Global Economic Monitor Databases (2014). The study employed the Johansen cointegration approach to establish the long-standing relationship between domestic savings and foreign direct investment. In addition, the Granger causality test was also carried out to examine the causal relationship between foreign direct investment and gross domestic savings. The results suggest that although foreign direct investment inflow can lead to domestic savings growth in the short run, in the long run it would substitute domestic savings. This implies that the effect of the increased inflows of foreign direct investment experienced in the recent past may in the long run hurt domestic savings growth in Zambia. Policy makers should therefore improve the governance mechanism for the use and monitoring of foreign direct investment inflows in Zambia and promote diversification away from mining, the main economic activity that accounts for more than 60 percent of direct foreign investment in Zambia. / AFRIKAANSE OPSOMMING: Hierdie studie het ondersoek ingestel na die oorsaaklikheidsverwantskap tussen direkte buitelandse belegging en binnelandse besparing in Zambië. Data vir die tydperk 1970 tot 2012 is uit die Wêreldbank se databasisse World Development Indicators en Global Economic Monitor (2014) bekom. Die studie het die Johansen-benadering van ko-integrasie gevolg om die lank bestaande verwantskap tussen binnelandse besparing en direkte buitelandse belegging te bepaal. Daarbenewens is die Granger-oorsaaklikheidstoets uitgevoer om die oorsaaklikheidsverwantskap tussen direkte buitelandse belegging en bruto binnelandse besparing te ondersoek. Die resultate dui daarop dat hoewel die invloeiing van direkte buitelandse belegging binnelandse besparing op kort termyn ’n hupstoot sal gee, dit binnelandse besparing op lang termyn sal vervang. Dít impliseer dat die verhoogde direkte buitelandse belegging wat in die onlangse verlede ondervind is, op lang termyn ’n skadelike uitwerking op groei in binnelandse besparing in Zambië kan hê. Beleidsvormers behoort dus die beheermeganisme vir die aanwending en monitering van direkte buitelandse belegging in Zambië te verbeter en diversifikasie aan te moedig weg van mynbou, die vernaamste ekonomiese aktiwiteit in die land wat tans vir meer as 60% van alle direkte buitelandse belegging in Zambië sorg.