Relationship between Foreign Direct Investment and Tourism: A Conceptual Review of South African Context

Abstract

Purpose: The aim of this study was to investigate theoretically the relationship between FDI and Tourism as engines of economic growth in South Africa. This aim was motivated as tourism has been found as a powerful engine that could be used to change any nation's economic fortunes, generate a lot more jobs and accelerate economic growth. And, Foreign Direct Investment (FDI) on the other hands has the potential to create jobs, increase productivity, enhance the domestic economy's competitiveness by exporting skills and technology, improve infrastructure, boost exports, and contribute to the world's developing countries on long-term economic growth. Methodology: This study was conducted using literature review based approach. Information on FDI and tourism was obtained from journals and periodic publications of legitimate organizations both local and international. Findings:  The findings of this study revealed that a degree of relationships exists between FDI and tourism advancement in South Africa, as economic growth largely depends on the positive attraction of both FDI and tourism.  However, it was also revealed that FDI hardly attains its optimal level in a country that is under the yoke of poor economic growth. Ironically, both developed and developing economies at one time or another faces a backdrop of variables that attracts FDI within the economic and political dynamics, which also affect sustainable tourism advancement within a nation. Implications:  It became imperative that for an advancement in tourism and economic growth in South Africa, stakeholders within these sectors should provide an enabling environment that will attract more FDI’s. This recommendation is based on the findings that FDI is a growth engine for tourism, which also leads to economic growth. Originality: This study unlike previous studies, succeeded in unveiling the relationship between FDI and tourism advancement in South Africa, with theoretical foundation that links them together for economic growth.