Acta Universitatis Danubius. Œconomica, Vol 13, No 4 (2017)

Abstract

This research studied the impact of infrastructural development on FDI inflows into Zimbabwe using annual time series data ranging from 1994 to 2015. Explanatory variables that determine FDI that were included in the study include market size, trade openness and financial sector development. Using the OLS –Heteroskedastic and Standard Error Consistent White Test approach, the study found out that infrastructural development as measured by internet users (per 100 people) had a positive and a significant impact on FDI inflows in Zimbabwe in line with both theory and empirical predictions. Furthermore, market size, trade openness and financial sector development in line with literature were found to have had a positive and significant influence on FDI inflows into Zimbabwe. In order to improve the inflow of net FDI into the country, Zimbabwean authorities need to create a conducive environment that entices foreign investors to invest into the country. This includes the formulation and implementation of policies that enhances infrastructural development, open up trade with other countries and grow the economy.