The Impact of External Debt On Foreign Direct Investment in Zimbabwe
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Date
2023-12-31
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Journal of Business (JoB)
Abstract
Using the framework of capital market and fitness theory, the study assessed the impact of external debt on foreign direct investment in Zimbabwe for the period 1980 to 2016. An Autoregressive Distributed Lag estimation technique was employed on annual data for the period 1980 to 2016 as it suits well small sample size. The results revealed that there is both a short-run and long run relationship between external debt and foreign direct investment. The findings of the study also revealed that current external debt has a positive impact on foreign direct investment inflows. The study concluded that the existence of debt overhang, as a consequence of the accumulation of past external debt stocks, negatively impact on foreign direct investment inflows. The study recommended that the government of Zimbabwe should intensively invest in economic growth-enhancing activities in the agricultural sector, infrastructure sector, education sector, healthcare sector, and technology, and foster a politically conducive environment.
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Muwando, S. and Nzou, A., 2024. Impact of external debt on foreign direct investments in Zimbabwe. Journal of Business, 9(01), pp.01-13.