M. Com. (Economics) / The objective of the study was to examine the behaviour of American foreign direct investment in South Africa since 1985. By the mid- eighties more than 300 American companies had direct investments or employees in South Africa. During the period 1984-1991, 215 of these companies withdrew from South Africa. Most of them sold their affiliates to local investors or local companies. Some sold their affiliates to non- South African companies. A few liquidated their South African operations while others sold their assets to trusts. Most of the companies that withdrew from South Africa maintained licensing and other contractual agreements with their former affiliates. No American company established new affiliates in South African during the period 1984-1991. During the period July 1991 - February 1994, 39 American companies settled in South Africa. Some of them were companies that withdrew from South Africa during the sanctions period. The number of companies re-entering the country could, however, be misleading. Only a few of these companies established manufacturing plants locally. The new settlement was not accompanied by a significant inflow of capital or the employment of large numbers of workers...