The Effects Of Foreign Direct Investments In Zambia(FDI)

Internationalization and trade issues generally pose three types of questions for economists.The fast is based on explanations of trade flows between at least two nations. The second refers to the nature and extent of gains or losses to an economy.Finally,the third issue concerns the effects of trade policies on an economy.Most theories of international trade are dedicated to the fast question,end attention will now turn to theoretical responses to such an issue in the form of these:It's clear that foreign direct investments(FDI) are also based on internationalization theory.In this paper we analyze the effects of the foreign direct investments in Zambia's economy and its firms in general. In analyzing the effects of FDI,its important to prove internationalization theory.And to show which factors of the theory do affect the GDP of an economy.As was recorded in a seminal article by Hayes and Abernathy(1980),the trade deficit performance of a nation cannot always be explained by macro-economic phenomena.It needs to be recognized that the role of the entrepreneur plays a part in explaining the international trading activities of a nation.Given that an economy may comprise several industries accommodating an array of firms,it appears reasonable that the role of decision makers within such organizations can,collectively,provide a substantial contribution to economic performance.In contrast to the international trade and foreign direct investments(FDI) theories such as internationalization theories Endeavour to explain how and why the firm engages in overseas activities and,in particular,how the dynamic nature of such behavior can be understood in an economy like Zambia.In order to understand the effect of foreign direct investments in developing countries like Zambia,indices in this paper are shown describing Zambia's growth from 2000 to 2008.This study also aims to ascertain(â…°) what are the positive effects for foreign investments in Zambia and then(â…±) whether the form of new foreign investment influences Zambia's developmental effects.By assessing the motivations for direct investment in Zambia and the extent to which FDI contributes to new employment and skills transfer,it seeks to shed light on appropriate policies for firms and the economy as a whole to pursue in order to encourage higher amounts of FDI and their likely implications for economic development.FDI is one element linking Zambia and other southern African countries to the global economy.The amount and forms of the foreign direct investments that ean be attracted will influence whether Southern Africa's poor and Zambia in particular can benefit from globalization of markets.As Zambia encourages foreign firms to invest in Zambia,its important for Zambia's companies in all sectors such as agriculture,mining,manufacturing to invest in other foreign countries in the world.Many of Zambia's firms have invested in the foreign countries as foreign direct investments.Hence this has lead to Zambia fast economic growth.As a case study for this research paper we use a very important firm in Zambia in the agriculture sector,Zambia coffee company.Zambia coffee company is considered as a foreign direct investment in other countries like Zimbabwe Kenya and Malawi because it has invested in these countries.As a case study we look at the effects of internationalization on a firm like Zambia coffee and the economy as a whole.Many economists have said that,in the early part of international involvement,firms rely on market experience and thereby make incremental adjustments.However,as the degree of international experience increases, planning systems are implemented which formalize strategic analysis and information search.International involvement continues to increase to the extent that experience may be translated across different markets and between various product groups,thus,enabling firms to advance the incremental process within markets.In this paper internationalization is used as a theory to understand more of the effects of the foreign direct investments(FDI) in Zambia and the econometrics mathematical formula to analyze these effects which have lead Zambia coffee company raise so high in Zambia's economy.E-views computer software is used in this economical analysis paper.At the end of this paper conclusion are given and then recommendations are also given to help less developed countries like Zambia improve their economies and firms by creating a good environment for foreign direct investments.And also helping its small firms to grow outward,investing in other economies and becoming foreign direct investments in other countries.This brings about economic growth,knowledge transfer,skills and creates employment for the poor.