Rationalization of government structures concerned with foreign direct investment policy in South Africa

Abstract

This thesis sought to focus attention on the fact that currently in the Republic of South Africa (RSA) there is no specific governmental body that is charged with complete responsibility for policy-making and regulation of foreign direct investment (FDI) in general and multinational enterprise (MNE) investment in particular. This issue was identified for study as it was noted that firstly, several other countries (irrespective of their level of development) have such an organization in place. Secondly and more importantly, it was also noted that there have been several cases in which a multinational enterprise posed legal, social and political challenges for host country governments for which such governments were not empowered to resolve in either the a priori or ex-post facto sense. This inability on the part of governments to deal effectively with the challenges created by the unique characteristics and behaviors of multinational enterprises could possibly have been mitigated through the existence of a governmental unit tasked with MNE regulation. The objective of the thesis, was to study the feasibility of designing, developing, and/or proposing, for South Africa, a governmental unit for policy making, policy implementation and control of the inward foreign direct investments of multinational enterprises, where it could firstly be shown that such an administrative unit is indeed needed. The arguments made in the study were framed in the form of a null hypothesis and a single research question. The null hypothesis of the study being: Ho = there is a necessity to formalize a government administrative structure for policy setting and implementation of multinational enterprise regulations in South Africa. The hypothesis was examined in terms of being accepted or rejected based in part upon first resolving the research question of the study which is: Is there a need for foreign direct investment policies that apply exclusively to multinational enterprises? As the thesis was of a qualitative rather than quantitative nature, the methodological approach primarily examined theoretical, empirical and anecdotal evidence to ascertain whether the hypothesis should be supported or rejected. Given that the null hypothesis was not disproved and the research question was answered in the affirmative, the thesis concluded and recommended the establishment of a small specialized unit of experts to serve as part of the public service but independent of any other governmental department or unit. The proposed unit should work to provide support to other government agencies in the areas of research, advice and coordination services. As the environment within which such an organizational unit operates can be expected to be relatively stable over time, and the work of the unit highly specialized, it is envisioned that decision making in the unit will be more centralized than de-centralized. The thesis ended by exploring optional organizational designs with the aim of recommending the appropriate hierarchical arrangements to be established for the proposed organizational unit. More specific answers with respect to, for example, the number of people to be employed, their job descriptions, and the remuneration scales to be applied to their positions are recommended by the thesis for further study.