Analsing The Effect Of Communication, Energy, And Transport Infrastructure Investment On Foreign Direct Investment In Selected Southern Africa Development Community (Sadc) Countries – A Panel Data App

Infrastructure investment is a key driver of economic growth, especially in developing regions like the Southern Africa Development Community (SADC). This study evaluates the effect of communication, energy, and transport infrastructure investments on Foreign Direct Investment (FDI) inflows in South Africa, Seychelles, Madagascar, and Mauritius from 1990 to 2022. Using a panel data approach, the research explores the relationship between infrastructure investments and FDI, guided by the Resource-Based View (RBV) and New Economic Geography theories. These frameworks emphasize how improved infrastructure reduces operational costs, enhances economic competitiveness, and attracts foreign investment, offering valuable insights for fostering sustainable development. The study employs robust econometric methods, including the Panel Autoregressive Distributed Lag (PARDL) and Panel Correlated Standard Error (PCSE) models, to analyse short- and long-term effects. Results show that transport and energy infrastructure investments significantly boost FDI inflows in the long term, while the influence of communication infrastructure appears statistically insignificant. The Dumitrescu-Hurlin panel causality test identifies unidirectional causality from energy and communication infrastructure to FDI, emphasizing their importance in attracting foreign investments. Unit root and cointegration tests confirm a long-run equilibrium relationship among the variables, indicating that infrastructure investments and FDI inflows move together over time. These findings highlight the need for targeted investments in transport and energy infrastructure to enhance the regions attractiveness to foreign investors. This study contributes to the literature by providing empirical evidence from the SADC context, offering actionable recommendations for policymakers to optimize FDI inflows and drive economic growth.