Public policies and institutions influencing South Africa’s outward foreign direct investment

Abstract

South Africa is among the leading outward foreign direct investor nations from emerging countries in the world. The country’s transnational corporations have investments in all the seven continents. The integration of the country into the global economic and trading system boosted its outward foreign direct investment (OFDI). Since the 1990s, South Africa has adopted a wide range of national policies, created institutions and become a party to international treaties that have remarkably influenced her OFDI. This study examines the public policies, institutions and political factors that influence South Africa’s OFDI since 1994. The country’s OFDI is influenced by diplomatic relations, implicit public policies and indirect institutions, which is similar to developed countries but different to other emerging countries. The study is stimulated by three factors – a few studies have focused on factors influencing OFDI from African countries; scanty empirical evidence on factors that influence South Africa’s OFDI; and the infancy state of African scholarship on the nexus between diplomacy and international investment. This study contributes to growing research on the role of diplomacy in influencing the direction and content of OFDI. Future studies should examine whether South Africa would benefit more through influencing OFDI following the approaches of other emerging countries.