Abstract:
Investigates into some of the factors which affect the decision by foreigners to invest in South Africa. Analysis of these factors should indicate methods of encouraging foreign investment in the country. The history of foreign investment in South Africa is analysed to determine whether South Africa in fact requires foreign investment for future growth. Empirical studies of the role of foreign investment are surveyed and found to be contradictory. Some concepts and determinants of foreign investment are considered in order to establish the crucial factors. The decision to manufacture abroad is affected by specific product related variables such as market size, tariffs, availability of raw materials and labour. Researchers have found a conceptual barrier to foreign investment: the management of many companies perceive a move abroad as being too fraught with uncertainty to be considered. This provides an opportunity for South African entrepreneurs to take the initiative by engaging such companies in licencing agreements or joint ventures. It is recognised that any investment proposal will finally be decided upon risk return criteria. Some factors specific to South Africa are discussed in this regard. South African foreign exchange control regulations are considered in some detail. Those aspects of South African Tax Law which impinge upon the foreign investor are discussed in detail. It is apparent that there is a need for co ordination in government policy. However, it is for private enterprise to take the lead in attracting foreign investment by using their superior knowledge of South African conditions to seek out opportunities for licencing and joint venture agreements.
