Impact of Foreign Capital Inflows on Economic Growth in Zimbabwe

This study examined the impact of foreign capital inflows on economic growth in Zimbabwe over the period 1980-2013 using the Error Correction Model. The results show that foreign direct investment, official development assistance, physical capital and labour force have a positive effect on economic growth. Foreign direct investment had more impact on economic growth than official development assistance, physical capital and labour force. Trade openness and external debt have a negative effect on economic growth. In the context of policy implication, there is need for the Government to put in place sound fiscal, trade and investment policies that promotes the flow of foreign direct investment and official development assistance, as well as resolving the debt overhang problem through continuous engagement of the external creditors. In addition, the Government should strengthen the protection of property rights and effective law enforcement among other institutions in order to make Zimbabwe a safe investment destination.).