A Case Study of Malawi’s Tourism Sector

This study seeks to determine the link between investment incentives and foreign direct investment (FDI) flows in Malawi’s tourism sector and also to question whether these incentives have promoted sustainable development in the country. It finds that investment incentives do not determine FDI in the tourism sector; rather, decisions to invest were largely driven by the the country’s natural resources; the cost of raw materials; the availability of relatively cheap labour; and the inflation, foreign exchange and interest rates. This suggests that the type, nature and quantity of FDI in the tourism sector is shaped by other government policy such as promoting increased private sector participation rather than by investment incentives per se. It therefore follows that this has implications for Malawi’s sustainable development goals, especially the role of investment incentives in shaping the economic and social impacts of investment, as well as environmental impacts, which the incentives seem to have affected negatively. About the authors Nelson Nsiku is a lecturer in Economics at the University of Malawi Polytechnic and is a member of several national associations and committees that contribute to the policy debate on economic plannin