SADC - Regional integration in Southern Africa and its effects on the political risk for foreign direct investment

Regional integration is on the political agenda in all parts of the world. During the time of post-colonial development and liberation struggles, Southern Africa saw its share of attempts at closer economic and political ties between states within the region. Today, the dominant regional organization in Southern Africa is the Southern African Development Community. Many regional organizations in the developing world, including SADC, explicitly state that a large part of the regional integration project is towards a goal of attracting an increase in foreign direct investment. The ability to attract FDI is based on various factors; covering many of these is the combined level of perceived political risk. Economic and political instability, social unrest, ethnic and military conflict, corruption in government, the threat of expropriation and breaches of contract; political risk is a multi-faceted concept. The thesis identifies what types of political risks are prevalent in the Southern...Show moreRegional integration is on the political agenda in all parts of the world. During the time of post-colonial development and liberation struggles, Southern Africa saw its share of attempts at closer economic and political ties between states within the region. Today, the dominant regional organization in Southern Africa is the Southern African Development Community. Many regional organizations in the developing world, including SADC, explicitly state that a large part of the regional integration project is towards a goal of attracting an increase in foreign direct investment. The ability to attract FDI is based on various factors; covering many of these is the combined level of perceived political risk. Economic and political instability, social unrest, ethnic and military conflict, corruption in government, the threat of expropriation and breaches of contract; political risk is a multi-faceted concept. The thesis identifies what types of political risks are prevalent in the Southern African region. The research focus addresses what SADC as a regional actor has contributed towards lowering the levels of political risk in specific countries and parts of the region. The thesis demonstrates that as theoretical assumptions and empirical evidence argue that regional integration is positive for the ability to attract FDI, Southern African countries face many obstacles on the way towards a fully integrated economic community. Meanwhile, the prospects for peace and security in the region are better at present than twenty years ago. The establishment and maintenance of legal, security and financial frameworks that would add to securing the interests of both the foreign investors and the host country and government are often lacking. Furthermore, the implementation of regional institutions have been hampered by various factors, including the member states’ own interests and a general unwillingness towards ceding sovereignty to transnational institutions . The role of South Africa as a regional hegemon and key policy-maker within SADC is discussed in order to further examine the regional dynamics in Southern Africa.Show less

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SADC - Regional integration in Southern Africa and its effects on the political risk for foreign direct investment