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FDI in Services in SADC: Key Issues for Regional Integration

FDI in Services in SADC: Key Issues for Regional Integration. Trudi Hartzenberg trudi@tralac.org 11-12 June 2005 Regional Integration Workshop Windhoek. Introduction. FDI Performance in SADC: What does the data say? What influences FDI location decisions in SADC?

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FDI in Services in SADC: Key Issues for Regional Integration

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  1. FDI in Services in SADC: Key Issues for Regional Integration Trudi Hartzenberg trudi@tralac.org 11-12 June 2005 Regional Integration Workshop Windhoek

  2. Introduction • FDI Performance in SADC: What does the data say? • What influences FDI location decisions in SADC? • Key FDI developments in SADC • FDI in services in SADC • FDI and Regional Integration • Conclusions

  3. FDI Performance in SADC • Slight slowdown in early 2000s after significant increase in late 1990s • Angola and South Africa key destinations (cautionary notes) • Industry focus Primary sectors – oil and gas (Angola): resource seeking Manufacturing – clothing and textiles: trade preference driven (Lesotho, Botswana, Namibia, Swaziland) Services – diverse locations (telecoms, banking) – South African investment in the region potential links between banking and mobile telephony • New MNCs in the Region - South African firms

  4. What influences FDI location decisions in SADC • Trade Preferences (AGOA – Lesotho, Namibia..) • Technology-induced opportunities (telecoms, IT industries) • Consumer demand growth (retail chains) • Econ and social stability • Large & expanding mkts • Low & stable interest rates and inflation • Effective competition policy • Low business transaction costs • Human capital and skills (modern & diverse) • Low cost infrastructure • Free trade and forex regimes

  5. FDI in Services • Key industry focus (telecoms, banking, tourism) • Role of domestic regulatory reform Privatisation Public-private ownership Market outcomes • Case Studies Telecoms: MTN Group (mobile telephony) Banking: Standard Bank Group (M&A), Barcalys/ABSA deal in South Africa • Tourism, mining and related

  6. FDI and Regional Integration • What kind of FDI promotes regional integration? • Trade and investment linkages in the region (cautionary note – lack of backward linkages in host country) • Domestic regulatory reform and FDI • Producer services, FDI and regional integration – regional commodity chains and business transaction costs • Mega Projects and Corridors • Small-scale/informal FDI – farmers, tourism infrastructure, consumer or personal services (hairdressing etc), language related, catering • Beyond South African FDI in the region

  7. Conclusions • FDI matters • Links between infrastructure-related FDI and private FDI (CORRIDORS) • Focus on services • South Africa in the region (MNCs) • Trade-investment linkages • Smaller-scale cross-border FDI

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