Comparative Analysis of Traditional Vs Chinese Foreign Direct Investment in Zambia

Abstract

Zambia has been a destination for foreign direct investment (FDI) for many decades now. The country has had the longest experience with traditional FDI spanning for about 70 years, (Lissie Elorza and Ashni Verma, 2019). Going by available international business literature which portray traditional FDI as an almost sacrosanct vehicle of development, a logical prognosis is that Zambia, for example, should hold a high income status in tandem with the Asian Tigers with whom it had similar GDP about 60 years ago. However, whilst the Asian Tigers are now highly industrialised, Zambia has dwindled back to low income status. Some studies (David Dollar and Aart Kraay, 2001; Easterly and Levine, 1997) have attributed this disparity to a number of factors including volume and type of FDI, investment and trade policies among others. This study focuses on the potency of traditional and non-traditional FDI within the Zambian context in relation to four variables: manufacturing, infrastructure, tax compliance and corporate social responsibility. This study employed ethnographic approach focusing on perceptions and experiences from local people (2000-2023) which was triangulated with desktop review (1930-1968). Findings reveal notable variations between the two sources of FDI, primarily informed by motivation of FDI and area of investment which have had subsequent influence on Zambia’s development prospects.

Keywords: Traditional and Non-traditional FDI, Corporate Social Responsibility, Manufacturing, Construction and tax evasion, economic development; Zambia.

DOI: 10.7176/JESD/15-2-02

Publication date: January 31^st 2024