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The Locational Behaviour of Foreign Direct Investment: Evidence from Johannesburg, South Africa

Abstract

This article represents a contribution to the limited scholarship on understanding the locational behaviour of foreign direct investment (FDI) in Africa. Against a background review of international research and debates on locational decision-making of foreign investors at both international (particularly within the developing world) and national scales of analysis, the profile and patterns of foreign investment in Johannesburg are documented and the key factors influencing investor location choice are analysed. Although investors from 34 countries are represented in Johannesburg, the leading ten investor countries, headed by USA, Germany and UK, account for 85% of all investments. An emerging trend is for the growth of FDI from India, China and the Middle East. Reasons given by foreign investors for selecting Johannesburg as an investment destination largely mirror the international experience of location decision-making by foreign investors. Johannesburg is shown to be the preferred choice for business operation both in South Africa and the broader southern African region because of several agglomeration factors which relate to the city's position as economic hub, financial centre and core market of southern Africa.

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Fig. 1
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Notes

  1. Although the inclusion of firms which are based outside Johannesburg was the major shortcoming of the city’s foreign investor data base, the analysis revealed other problems which required attention, including duplicate entries of firms, inconsistent listing of foreign airlines and certain missing entries. The data base is also inconsistent in terms of information that is provided for such firm. As the listing is inconsistent in terms of providing data on size of investment, no detailed analysis of that issue can be undertaken. Equally, the data base is inconsistent regarding information on the nature of the investor in terms of what economic sector they are involved with and more importantly of full details of the Johannesburg operation.

  2. For the other five investments, the investment was too recent for job data to be available.

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Acknowledgements

Thanks are due to Byron Wilson for interview assistance, to Jayne Rogerson for data processing and Wendy Job for preparation of the accompanying figures.

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Correspondence to Christian M. Rogerson.

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Rogerson, C.M. The Locational Behaviour of Foreign Direct Investment: Evidence from Johannesburg, South Africa. Urban Forum 20, 415 (2009). https://doi.org/10.1007/s12132-009-9071-z

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Keywords

  • Location of foreign direct investment
  • Johannesburg
  • South Africa