The statistical testing results showed that international trade has a positive impact on economic growth. In theory, FDI can be expected to benefit the host country by transferring resources, increasing employment opportunities, improving the balance of payments, and transferring technology.
His Excellency Dr. Hage G Geingob, Distinguished Delegates, thank you for your active participation in the Namibia Investment Summit held in Dubai on 23rd March 2022. I am especially pleased with the high level of engagement by the wide cross-section of stakeholders. I believe that together we are making measured progress towards the V2030. His Excellency, you have demonstrated sure, sound economic management and fiscal discipline, and a commitment to Namibia’s economic recovery. You have shown that you can build a nation’s prosperity and transform the lives of the Namibian people. I believe that political and economic liberty go together and that prosperity is another word for economic freedom. Together, we are determined to build Namibia which is growing in peace, prosperity, and in hope. God bless you, family, and tenure, God bless Namibia.
Furthermore, the opportunities abound for illustrating that private investment can lead to broad‑based sustainable development, while also providing significant returns to investors. The economy of a country is always linked to the world economy through external economic activities such as foreign investment and foreign trade. In an effort to attract FDI and spur economic growth, Namibia has established the Namibia Investment Promotion and Development Board and has introduced policies that include fiscal and financial incentives. The NIPDB is to review and propose policy reforms and measures to support trade and investment promotion, conducive labor market policies, improve the country’s Competitiveness and the Ease of Doing Business. Foreign direct investment is a phenomenon resulting from globalization, which involves the integration of the domestic economic system with global markets. It is accomplished through opening up of the local economic sector as well as domestic capital for foreign investors to establish a business, within the economy. FDI is seen as an important source of capital formation particularly when the capital base is low. Capital inflow is seen as a way of creating a surplus in the capital account of the balance of payments or making up for the deficit on the current account. FDI contributes to growth through several channels. It directly affects growth by being a source of capital formation. Capital formation refers to net additions to the capital stock of an economy, including the creation of factories, new machinery, and improved transportation. As a part of private investment, an increase in FDI will, by itself, contribute to an increase in total investment. An increase in investment directly contributes to growth. FDI also contributes to growth indirectly. FDI beneficially influences other macroeconomic variables, such as employment, export, consumption, and saving. These, in turn, enhance growth.
However, FDI-induced global integration can have negative consequences for Namibia’s economy, such as an increase in net imports leading to current account deficits. The proliferation of incentives may also cause significant distortion in the economy. Even though such policies can be effective in attracting foreign investment, the potential benefit that FDI can bring to Namibia could be limited. The FDI spillovers are greatest in richer countries, while in poorer countries the technologies being used are often less accustomed to the needs of the economy thereby limiting the benefits from technological spillovers. Nevertheless, foreign investment does not come devoid of some negative aspects. There is normally a tendency for overutilization of the available natural resources, as the companies strive to maximize profits in their venture. The tragedy of the commons whereby many organizations compete to utilize a shared resource leads to degradation of natural resources as well as environmental pollution, which have largely been associated with the issue of climate change. With the foreign companies depending on factors such as political stability and the goodwill of the existing rule, there is a possibility of collapse leading to mass unemployment. On the other hand, the influx of foreign investors in a country leads to a rise in demand for particular services such as housing, leading to the increase in prices of the services, suppressing the local people who are unable to purchase the services. This deficit lowers the standards of living of the population.
It is important to understand that economic development in a nation is a slow process whereby the people’s standards of living are improved as a result of an increase in income, leading to a shift from a low income to a high-income economy. To accomplish economic development, Namibia needs to ensure a favorable environment for investment especially allowing foreign capital movement into the economy. For this to be accomplished, the political environment has to be conducive for foreign investors who might be scared of investing their capital in a volatile economy. Foreign investment comes in handy. It supplements the local industries generating employment for skilled and unskilled labor. This contributes to economic growth, as people are capable of coping with the increasing cost of living. Namibian employees usually benefit through knowledge transfer from foreign employees whom they have a chance to work with. This helps the local labor force to develop advanced skills that are significant for productivity. Economic development is accomplished when an economy has a capable workforce to maintain competitiveness in the local industries. Knowledge and technology transfer is significant in economic development. Moreover, the establishment of foreign industries in Namibia leads to the development of other enterprises.
To this end, in an effort to attract FDI and spur economic growth, has established investment agencies. Sound macroeconomic policies, greater openness, and higher domestic investment would advance economic growth.
– by Josef Kefas Sheehama