IDEAS home Printed from https://ideas.repec.org/a/afj/journl/v15y2013i1p13-35.html
   My bibliography  Save this article

Fiscal Incentives for FDI and Infrastructure Development: Economic Diversification Options for SADC Countries

Author

Listed:
  • Olalekan Yinusa

    (Obafemi Awolowo University)

Abstract

This paper attempts to investigate the effects of fiscal incentives on manufacturing Foreign Direct Investment (MANFDI) in 13 Southern African Development Community (SADC) countries for the period 1995 to 2007. Using pooled ordinary least squares (POLS) and panel least squares estimation techniques, the results indicate that availability of infrastructure, skilled labour, and degree of openness of the economy are significant drivers of MANFDI to SADC region. However, taxes on international trade, overvalued real exchange rate and macroeconomic instability have negative effects on MANFDI. Fiscal incentives alone are not significant determinants of MANFDI to SADC. However, fiscal incentives interacting with infrastructure are positively significant in explaining MANFDI. The paper concludes that in seeking to attract manufacturing FDI to SADC, priority should be given to infrastructure development and exchange rate policy design and management to avoid loss of competitiveness. Fiscal incentives are only complementary.

Suggested Citation

  • Olalekan Yinusa, 2013. "Fiscal Incentives for FDI and Infrastructure Development: Economic Diversification Options for SADC Countries," The African Finance Journal, Africagrowth Institute, vol. 15(1), pages 13-35.
    • Handle: RePEc:afj:journl:v:15:y:2013:i:1:p:13-35
    as

    Download full text from publisher

    File URL: http://www.journals.co.za/ej/ejour_finj.html
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Fiscal Incentives; Manufacturing FDI; Infrastructure Development; SADC Countries;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:afj:journl:v:15:y:2013:i:1:p:13-35. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk De Doncker (email available below). General contact details of provider: https://edirc.repec.org/data/afrgrza.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.