This paper is devoted to one of the most advanced, broad-based and productive economy in Africa. This paper is about trying to understand how the Republic of South Africa became "one of the most advanced and productive economies" in Africa. We will pay attention to foreign direct investment and their role in the country's economic growth. The reason for choosing South Africa as an investment destination for some was the fact that it showed the willingness and desire to pinpoint business opportunities in the country. South Africa has enormous potential as an investment destination, offering a unique combination of "highly developed first world economic infrastructure with a vibrant emerging market economy". There are a huge numbers of incentives for the investors.
Introduction
The Republic of South Africa is a country of about 50 million people that is rich in diverse cultures, people and natural heritage. The country is situated on the Southern coast of Africa and its marine frontiers are the Atlantic and Indian Oceans. South Africa has diverse cultures and languages. Between 1948 and 1990 South Africa was under the Apartheid regime. The Apartheid formally divided South Africa in different racial groups- Whites, "Colored", Indians and several separate African racial groups. During the Apartheid regime the situation in South Africa was not favorable for foreign investments and the local firms were not welcomed abroad. By the end of the Apartheid the economic conditions took a sharp turn. The task of the new government was to stabilize the economy and to achieve economic growth and it started achieving its goal by reducing tariffs, reforming the labor market in order to reduce the discrimination, relaxing foreign exchange controls, reining in domestic spending and bringing down inflation.
[...] Companies withdraw from South Africa following difficulties in recruiting appropriately skilled and qualified local workforce as well as in obtaining work permits for expatriate employees. Laws do not provide security for the foreign companies; on the contrary, their local counterparts are more protected. Along with the administrative obstacles, companies are driven back by crime, excessively protective labor regulations, interest rate, tax rates and uncertainty. Another factor that affects FDI decisions is the trade laws and regulations, as well as customs practices How to motivate Foreign Direct Investment in South Africa? [...]
[...] South Africa has to be marketed to foreign investors. There is no better way to exhibit the country in front of the investors than attracting tourists and global events in order to improve the preferences for South Africa. The government should provide basic information about South Africa and its economy. The positive image of the country should be developed and this may be achieved by communication strategy targeted at the most influential foreign financial print and electronic media. Foreign investments can be approached by targeted investment opportunities. [...]
[...] South Africa is an emerging market, which means that it has social and business activities that are rapidly growing and industrializing. As an emerging market it needs foreign direct investment for economic development and the government and NGOs realize that well. FDI in South Africa has been on the increase with intermittent lapses ever since 1956. Mining and Quarrying and Manufacturing industries are traditionally high-level recipients of FDI, however, we see a recent surge in portfolio investment affecting positively increases in FDI for sectors in the Financial, Insurance and Business industries. [...]
[...] The reason for choosing South Africa for an investment destination for some was the fact that it showed the willingness and desire to pinpoint business opportunities in the country. This identification is connected with the important element of exposing the investors to South Africa through holidays, business trips, highlights the importance of such efforts as the FIFA World Cup 2010. The broadcast effect associated with investments by large, recognized multinational corporations should not be ignored. What makes investors be willing to invest in SA is their perception of SA. [...]
[...] Unfortunately the wide diversification of the manufacturing industry suggests more limited opportunities for market capture. Furthermore, the disparities in income between South African Development Community (SADC) countries are also against the market seeking investment. The SADC alliance is not in favor of South Africa. In order to achieve an important role in terms of leadership in SADC and in region marketing, South Africa has to identify itself as an investment destination, separate from the rest of Africa. Efficiency- seeking investments are undertaken in order more favorable operation costs to be achieved. [...]
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