Question answer 1. What are the costs and benefits to South Africa of having more foreign direct investment?

Of having less?
Due to its traditionally high unemployment rates, jobs are perhaps the biggest benefit to South Africa from increases in FDI. Economic growth would also be increased through FDI, especially since South Africas internal sa ings and in estment rates ha e been too low to finance much business e!pansion. FDI in state"owned enterprises could also impro e the #uality of goods and ser ices produced by these companies, and competition from foreign firms could pro ide incenti e to local firms to inno ate more. Finally, FDI would help di ersify the South African economy. $ess foreign in estment would li%ely mean fewer jobs, slower growth, lower #uality goods and ser ices, less inno ation, and a less di erse economy.

2. How might a compan tr to weigh fairl the opportunities and ris!s of investing in South Africa?
&anagers need to loo% at a comprehensi e array of economic, political, and geographic factors in assessing the suitability of South Africa for in estment. &ar%et si'e is a positi e in South Africa, but economic growth has been erratic and slow at times. (he political situation is relati ely stable and go ernment corruption is low, but crime rates are high, including the highest murder rate in the world. )etting e!patriates to relocate to South Africa has been challenging for many foreign companies. Still, opportunities in Africa are only li%ely to impro e in the future and South Africa could ser e as an effecti e base for future e!pansion into other African mar%ets. 3.

how

"f South Africa is to receive more foreign direct investment# should it prioriti$e policies to attract it?

(he most important thing the South African go ernment could do in the short term would be to reduce the crime rate and impro e the security situation in the country. Also, easing restrictions and regulations that hamper FDI would help as well. Finally, South Africa needs to do a better job of mar%eting its in estment opportunities to foreigners. An aggressi e public relations campaign on a global scale could help to raise awareness of the positi e aspects of in esting in South Africa and impro e the image of the country in the minds of foreigners.

4.

Assume you represent a non-South African company and are considering foreign expansion. What factors would you consider when comparing South Africa with other emerging markets where you might locate? What about in terms of de eloped markets? What about in terms of other African markets?
As a non"South African company, I would loo% at in esting in South Africa from two perspecti es. &y analysis of the country would focus on the mar%et si'e and potential demand for my products and*or ser ices, as well as the iability of South Africa as a site for those goods or ser ices to be produced and possibly e!ported to other countries within Africa and beyond. (he mar%et potential of the country is large due to the relati ely large population. +igher income growth would ma%e this mar%et e en more attracti e. I would also loo% at South Africa as an attracti e jumping off spot for ser ing other emerging mar%ets in Africa. I would be concerned, howe er, about the security situation and #uality of life issues. I would also prefer a more friendly welcome from the go ernment, with incenti es such as ta! brea%s and infrastructure impro ements. South Africa compares fa orably to other African mar%ets, but continues to lag behind most de eloped mar%ets.