IMPACT OF FDI AND DEVELOPMENT POLICIES ON WELFARE IN ZAMBIA

Abstract

In its quest to realize vision 2030 of middle – income status, the Zambian government instituted several developmental policies. These were enabled in order to accelerate economic growth and improve human development. This paper looked at the Human Development Index (HDI) and its components, Foreign Direct Investment (FDI) and other economic trends. These were analyzed from 1990 to 2017 and also compared with specific countries. Over time there were improvements in the said indicators for Zambia. However, concerns still existed on issues such as insufficient levels of innovation and the slow decline in the poverty levels. The average years of schooling were seven, which also contributed to the country’s low Global Innovation ranking. It was noted that Multi-National Corporations (MNCs) when bringing investments mainly focussed on sectors such as mining and manufacturing. Education and health received insignificant attention in this regard. In support of the Endogenous Growth Model, which advocated for investing in human capital, the priorities of MNCs ought to be revisited. This article applied inductive reasoning to descriptive analysis. Policies and economic trends were reviewed. In order to improve from the current economic trends, investment should be directed towards areas which have a direct impact on welfare. The government through the Zambia Development Agency (ZDA) also ought to redirect investment towards social aspects such as education and health. Lastly, for the impact of external investment to be much more realized, the management of institutions needs improvement.

Keywords

• HDI
• FDI
• Developmental Policies
• Economic Trends
• Zambia

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