GLOBAL POLITICAL ECONOMY:

Read the following extract and answer the questions that follow: Most South Africans 'back foreign direct investment' survey shows Foreign investments in the Western Cape need to be sustainable and to foster accountability if they are to be worthwhile, Nomi Nkondlo the ANC provincial spokesperson on finance and economic opportunities has said. This came as data from an international survey by the Pew Research Centre on attitudes toward foreign direct investment in South Africa and other countries, showed a majority of people support it. The survey said: "In all countries surveyed, support was significantly higher for foreign companies building factories than for these companies buying domestic companies outright. "A majority of South Africans (67%) said foreign companies building new factories in their country - sometimes referred to as greenfield investment - is a good thing." According to the survey: "Support for foreign companies buying domestic ones has fallen in South Africa since 2014 to 45%. The share of adults expressing support for the practice declined by double digits (12%) in South Africa between 2014 and 2019." Nkondlo said: "While foreign investment to build factories will always enjoy favourable support given the prospects of jobs for varied skills levels including lower and unskilled, the results at this point have not always been as desired. "The resources we spend as a province to attract foreign investment must be justifiable, and this includes ensuring that the frameworks of such foreign investments provide space to communities and labour as equal partners in the public-private partnership approach. "The option of buying existing companies may not receive much support with the obvious reason being that where a domestic economy is struggling to build its own domestic markets, such foreign ownership or dominance will be a disadvantage for its economic development, let alone protection of its own sovereignty. "While there is no longer contestation about the need and role of foreign investment to grow domestic economies, the question is whether such investments live up to their promise of increased growth, more especially given the assumptions made in relation to local realities and demands," said Nkondlo. The survey was fielded before the global spread of Covid-19, which is projected to lead to as much as a 40% decrease in foreign direct investment this year, according to the UN. Wesgro, the official tourism, trade and investment promotion agency for Cape Town and the Western Cape, has not allowed Covid-19 restrictions to prevent it from marketing Cape Town and the province as desirable investment options. Wesgro said due to lockdown restrictions, it had to quickly adjust to "business unusual" and found an alternative solution to link up Western Cape companies to potential business partners. Wesgro CEO Tim Harris said: "All foreign investment that leads to job creation is encouraged. However, in particular, the province seeks to attract and identify investors that are efficiency-seeking." Harris said: "It should however be noted that encouraging established businesses to undertake follow-on investments is often five times less costly from a facilitation perspective than attracting new greenfield fixed investments. Based on this, the Western Cape government, City of Cape Town and Wesgro are working together to enhance support for established investors and to support increased domestic direct investment in the region."

(Source: https://www.iol.co.za/capeargus/news/most-south-africans-back-foreign[1]direct-investment-survey-shows-8f3d8a79-e75b-434e-a47c-76e64f6e940a)

Question 2.1:

Taking the above article into consideration, explain why South Africa would want to "back foreign direct investment". (10 POINTS)