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

Abstract

Tourism is a powerful engine that can be used to change any nation's economic fortunes, generate a lot more jobs and accelerate economic growth. Accordingly, 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. Although, 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. This study, however, investigates theoretically the relationship between FDI and Tourism as engines of economic growth in South Africa. This study was developed using literature review based approach. Information on FDI and tourism was obtained from journals and periodic publications of legitimate organizations both local and international. 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 both FDI and tourism advancement and visa-vice. Finally, it was recommended 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.