THE IMPACT OF INFLATION ON FOREIGN DIRECT INVESTMENT (FDI) INFLOWS: EVIDENCE FROM ZIMBABWEAN ECONOMY

Zimbabwe lacks sufficient FDI even though the country is endowed with resources that normally attract FDI inflows. There is underinvestment in all the sectors across the economy as it faces a confidence crisis due to rampant inflationary pressures. This study examined the impact of inflation on foreign direct investment inflows (FDI) in Zimbabwe. The study employed an autoregressive distributed lag (ARDL) technique to estimate the relationship between FDI, inflation and GDP on time series data from 2009 to 2022. The findings of the study revealed that inflation negatively influenced FDI inflows in Zimbabwe. The major recommendations of the study include inflation targeting and control, and implementing favorable exchange rate controls, political stability and combating corruption.