Violent Crime and Foreign Direct Investment: The South African Case

Abstract

South Africa has been seen over the years as a violent country. Violent crime has been a major factor contributing to that perception. Crime not only makes daily life more dangerous for citizens of a country, but can even challenge the viability of governments. Crime fighting efforts drain state resources, threaten the delivery of public services, and might have a negative influence on institutional stability and business environment. This study examines the impact of violent crime on foreign direct investment (FDI) inflows into South Africa. Using time series data, ordinary least square (OLS) technic was employed to explore the relationship between these two variables. The analysis shows how the correlation between violent crime and FDI is both negative and significant. We therefore emphasize the need to evolve a safe business environment that allows capital flow through FDI which will generate spillover effect and a sustainable economic development. The Security Strategic Management Approach and Models recommended to achieve this, are aimed at combating the creators and perpetuators of violent crime that lead to situations of insecurity, and simultaneously addressing and mitigating the sources of those situations and the involvement of all stakeholders both in public and private capacity-government, civil society, communities and individuals- to supply resources, expertise and information that are required to ensure a safe environment.