BMZ ACADEMY
BMZ ACADEMY
@061 262 1185/068 053 8213
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Contents
QUESTION 1 ............................................................................................................. 3
QUESTION2 .............................................................................................................. 6
QUESTION 3: ............................................................................................................ 9
QUESTION 4 ........................................................................................................... 12
Bibliography ............................................................................................................. 15
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QUESTION 1
Foreign direct investment (FDI) has some role to play in developing economies.
Critically examine the socio-economic benefits and challenges that face African
countries that are attributable to FDI. Use practical examples to substantiate your
answer. (20 marks)
Foreign direct investment (FDI) has become a pivotal driver of economic
development in many African countries. It brings substantial socio-economic
benefits, such as infrastructure development, job creation, and technology transfer,
contributing to overall growth and development (Jude & Levieuge, 2017). However,
FDI also poses challenges, including economic dependence, resource exploitation,
income inequality, and potential loss of sovereignty.
Socio-Economic Benefits
i. Economic Growth and Development:
Investment in Infrastructure: FDI often leads to the development of infrastructure
such as roads, airports, and utilities (Jude & Levieuge, 2017). For instance, China's
investments in Ethiopia have significantly improved the country's infrastructure,
enhanced connectivity and supporting economic activities.
Job Creation: FDI projects often create jobs, reducing unemployment and providing
income for local populations (Hill, 2023). The investment by multinational companies
like Unilever in Nigeria has resulted in thousands of direct and indirect job
opportunities.
ii. Technology Transfer:
Skill Development: FDI can lead to the transfer of technology and skills to the local
workforce (Dangol, 2021). For example, automotive companies like Volkswagen in
South Africa have contributed to skill development through training programs for
local employees.
Innovation and Productivity: Introduction of advanced technologies can increase
productivity and foster innovation. The tech industry in Kenya, often referred to as
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