The impact of foreign direct investment on post-war South African economic development

Doctoral Thesis


Permanent link to this Item
Journal Title
Link to Journal
Journal ISSN
Volume Title

University of Cape Town

The thesis examines the theory of the determinants and welfare impact of foreign direct investment on host countries, concluding that resource transfer effects are not necessarily beneficial in certain circumstances. The distribution and penetration of foreign direct investment in the South African economy is analysed in the context of the debate about dependency and the role of technology in economic development. It is concluded that given the small amounts of fixed capital actually transferred to South Africa and the negative basic transfer which has occurred since the war, the role of technology in the economic development of South Africa has been crucial. It is argued that despite the relatively low level of foreign direct investment penetration in south Africa, efforts to reduce this penetration are hampered by continuing high dependence on foreign technology, which reflects the ~ay in which the international technology market works. The conclusion is that this dependence can only be reduced by assimilating and copying foreign technology, which should, if necessary, be purchased separately from capital, especially if foreign investors are reluctant to risk fixed investment in the New South Africa. The statistical sources used are official South African Reserve Bank figures for capital flows and stocks, a data base constructed by the author from the Bureau of Market Research's unpublished industrial register and the results of a questionnaire administered to a stratified random sample of local and foreign manufacturing firms in South Africa.

Bibliography: leaves 305-324.