Macroeconomic Stabilization Effect of Foreign Direct Investment in Zimbabwe

Countries undergo economic cycles with varying lengths depending on macroeconomic policy strength. Zimbabwe has faced decades of economic and financial crisis. This study analyzes the macroeconomic stabilization effect of foreign direct investment (FDI) inflows in Zimbabwe using annual data from 2009 to 2019. Through trend and correlation analysis, a positive correlation of 78.87% between national income and FDI was found, indicating that FDI inflows are pro-cyclical—they rise and fall with national income rather than stabilizing it. The study concludes that FDI inflows lack macroeconomic stabilization impact on national income fluctuations, though increased FDI levels and improved macroeconomic policies could enhance economic stability.