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The Benefits of Fdi in Zambian Economy

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The Benefits of Fdi in Zambian Economy

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  • August 2012
  • 2551 Words
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The essay will discuss the extent in which the Zambian economy has benefited from foreign direct investment. Its will analyse the positives and negatives that has come with foreign Direct Investment in Zambia. Zambia has recorded a number of foreign investments coming in the country in various sectors. Zambia is one of the 33 countries in Africa which require Foreign Direct Investment (FDI) and integration into the global economy for their social and economic development. It is for this reason that assessment of FDI’s impact on the country’s economy becomes an essential element To understand the extent of the country’s socio-economic development. FDI is critical to the Low Development Countries (LDCs), because their income levels and domestic savings are so low that external capital is essential for investment in the extraction and beneficiation of their natural resources and other economic opportunities for value addition and enhanced economic growth. In the LDCs FDI promotes social and economic development through technology and skills transfer, higher employment opportunities, increased productivity and enhanced access to export markets with higher value product offerings.

During post independence the government embarked on a programme of industrialization based on a policy of import substitution. In promoting self-reliance, domestic industries were encouraged to produce manufactured goods. This support operated through putting tariffs on imports keeping closed government control over foreign exchange and restricted access to many multinational enterprises. The Kaunda government created a large number of state owned enterprises and parastatals. These organizations concentrated in the sector like agriculture, mining and manufacturing and output was controlled by the government. Government also decided the pricing of commodities which was in line with the self-reliance and reduction of poverty. As with many command economies the planning required largely...