Demystifying the resource nationalism : how South Africa can increase FDIs into mining industry

Abstract

The outcome of this comparative international research provides the basic recommendations for South African policymakers on how to approach the debates around nationalisation of the mines. The dependent variable FDI was tested through the seven hypotheses. 20 resource rich countries were chosen and data was obtained from the World Bank, the Frazer Institute Annual Survey of Mining Companies and the Raw Materials Group. Regression models were run to compare the results for the total sample and two sub-sets.The outcomes of the statistical analyses revealed that geological data and political stability have the highest correlation with the independent variable FDI. Political stability was the only independent variable to have high correlations with all independent variables, implying that politics drives economics. No static regression model was obtained suggesting that each country will require a unique approach by MNCs to invest. In the light of Black Economic Empowerment (BEE), forced joint ventures in fact boost the FDIs in the mining sector.