Foreign direct investment, institutions and economic growth in the selected Southern African Development Community (SADC) countries
- Authors: Onceya, Siyabulela
- Date: 2023-06
- Subjects: Investments, Foreign -- Africa, Southern , Southern African Development Community -- Economic conditions , Economic development -- Africa, Southern
- Language: English
- Type: Doctoral theses , text
- Identifier: http://hdl.handle.net/10353/28672 , vital:74497
- Description: Examining the relationship between economic growth and foreign direct investment (FDI) has been a subject of discussion for many researchers, economists, and policy analysts mainly in developing regions. It is important to note that, recent literature highlights that there are other country-specific conditions such as state of institutions which are important in attracting FDI inflows into a country. Given this, the study analysed the relationship between FDI, institutions and economic growth in the Southern African Development Community (SADC) for the period 1990- 2020. The analysis was carried out at both cross- country (2010 to 2018) and individual country level (1990 to 2018). The main objectives of the study were to review the trends of FDI inflow into the region, institutional framework, and trends economic growth in the region as well as member countries. Secondly, to analyse the impact of FDI inflow and institutions on economic growth in the selected SADC countries. Thirdly, to examine how institutions and other factors determine the amount of FDI inflow to the selected SADC countries an provide policy recommendations. Existing literature has documented the relationship between FDI and economic growth. However, the significance of this study is that it provides an analysis of the impact of FDI inflows on economic growth in the SADC region at both cross-country and country specific level. At cross- country level, the Generalized Methods of Moments (GMM) was utilized as the estimation technique. The empirical results revealed that there exists a positive relationship between FDI and economic growth both in the short run and long run. The results also revealed that institutions in combination with financial sector development have a positive effect on economic growth in the SADC region. This gives support to the complimentary view of the importance of institutions and financial sector development as important factors determining the extent to which FDI influences economic growth. Guided by economic theory which suggests that there is a two-way relationship between FDI and economic growth, granger causality tests were performed to check the direction of effect between the two variables. The empirical results revealed that there is a bi-directional relationship between FDI, institutions and economic growth. This in a way suggest that the past values of each of the variables, explains the current values of the other variables. On the other hand, at country level, utilising the Autoregressive Distributed Lag model, empirical results revealed that the effects of FDI and institutions on economic growth is positive and significant. However, this was not found to be the case for Mauritius and Namibia. Given the significant role played by FDI in promoting economic growth, the study also investigated the factors determining the inflow of FDI into the SADC region focusing on the role played by institutions and other factors utilising GMM technique. The empirical results revealed that, in addition to institutions, financial development, infrastructure, and education also play an important role in determining the inflow of FDI into these countries. To a greater extent the same findings were also established at country level. Of great importance the study recommends that at a country level, countries should develop and adopt policies that strengthen good governance and sound institutions. These policies must be implemented and monitored to attract more FDI both in the short-run and long-run. , Thesis (DCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Authors: Onceya, Siyabulela
- Date: 2023-06
- Subjects: Investments, Foreign -- Africa, Southern , Southern African Development Community -- Economic conditions , Economic development -- Africa, Southern
- Language: English
- Type: Doctoral theses , text
- Identifier: http://hdl.handle.net/10353/28672 , vital:74497
- Description: Examining the relationship between economic growth and foreign direct investment (FDI) has been a subject of discussion for many researchers, economists, and policy analysts mainly in developing regions. It is important to note that, recent literature highlights that there are other country-specific conditions such as state of institutions which are important in attracting FDI inflows into a country. Given this, the study analysed the relationship between FDI, institutions and economic growth in the Southern African Development Community (SADC) for the period 1990- 2020. The analysis was carried out at both cross- country (2010 to 2018) and individual country level (1990 to 2018). The main objectives of the study were to review the trends of FDI inflow into the region, institutional framework, and trends economic growth in the region as well as member countries. Secondly, to analyse the impact of FDI inflow and institutions on economic growth in the selected SADC countries. Thirdly, to examine how institutions and other factors determine the amount of FDI inflow to the selected SADC countries an provide policy recommendations. Existing literature has documented the relationship between FDI and economic growth. However, the significance of this study is that it provides an analysis of the impact of FDI inflows on economic growth in the SADC region at both cross-country and country specific level. At cross- country level, the Generalized Methods of Moments (GMM) was utilized as the estimation technique. The empirical results revealed that there exists a positive relationship between FDI and economic growth both in the short run and long run. The results also revealed that institutions in combination with financial sector development have a positive effect on economic growth in the SADC region. This gives support to the complimentary view of the importance of institutions and financial sector development as important factors determining the extent to which FDI influences economic growth. Guided by economic theory which suggests that there is a two-way relationship between FDI and economic growth, granger causality tests were performed to check the direction of effect between the two variables. The empirical results revealed that there is a bi-directional relationship between FDI, institutions and economic growth. This in a way suggest that the past values of each of the variables, explains the current values of the other variables. On the other hand, at country level, utilising the Autoregressive Distributed Lag model, empirical results revealed that the effects of FDI and institutions on economic growth is positive and significant. However, this was not found to be the case for Mauritius and Namibia. Given the significant role played by FDI in promoting economic growth, the study also investigated the factors determining the inflow of FDI into the SADC region focusing on the role played by institutions and other factors utilising GMM technique. The empirical results revealed that, in addition to institutions, financial development, infrastructure, and education also play an important role in determining the inflow of FDI into these countries. To a greater extent the same findings were also established at country level. Of great importance the study recommends that at a country level, countries should develop and adopt policies that strengthen good governance and sound institutions. These policies must be implemented and monitored to attract more FDI both in the short-run and long-run. , Thesis (DCom) -- Faculty of Management and Commerce, 2023
- Full Text:
Financial sector development, financial innovation and economic growth: case of a selected SADC countries
- Mpukumpa, Siphosethu https://orcid.org/0000-0001-7342-8751
- Authors: Mpukumpa, Siphosethu https://orcid.org/0000-0001-7342-8751
- Date: 2023-04
- Subjects: Financial services industry -- Africa, Southern , Investments -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26852 , vital:66036
- Description: The financial sector plays a pivotal role in an economy of a country; hence the importance of financial sector development cannot be underestimated. Financial sector development is widely regarded as another conduit through which financial innovation and economic growth can be alleviated. The study firstly empirically examines the effect of financial sector development on financial innovation and also the impact of financial sector development and financial innovation on economic growth in selected Southern African Development Community (SADC) countries, employing the Generalized Method of Moments (GMM) technique for the period 1990 to 2020. Empirical results revealed that financial sector development overall does have an impact on financial innovation in the selected SADC countries. And also, financial sector development together with financial innovation does have an impact on economic growth in the selected SADC countries. However, on the relationship between financial system stability, financial innovation and economic growth, results reveal that a stable financial system is beneficial to new technological advancement and improved economic growth. Therefore, the overall findings from the study indicate that financial access or financial inclusion and financial stability is what increases financial innovation and boosts economic growth instead of mere financial sector development at a broader level. , Thesis (MCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Authors: Mpukumpa, Siphosethu https://orcid.org/0000-0001-7342-8751
- Date: 2023-04
- Subjects: Financial services industry -- Africa, Southern , Investments -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26852 , vital:66036
- Description: The financial sector plays a pivotal role in an economy of a country; hence the importance of financial sector development cannot be underestimated. Financial sector development is widely regarded as another conduit through which financial innovation and economic growth can be alleviated. The study firstly empirically examines the effect of financial sector development on financial innovation and also the impact of financial sector development and financial innovation on economic growth in selected Southern African Development Community (SADC) countries, employing the Generalized Method of Moments (GMM) technique for the period 1990 to 2020. Empirical results revealed that financial sector development overall does have an impact on financial innovation in the selected SADC countries. And also, financial sector development together with financial innovation does have an impact on economic growth in the selected SADC countries. However, on the relationship between financial system stability, financial innovation and economic growth, results reveal that a stable financial system is beneficial to new technological advancement and improved economic growth. Therefore, the overall findings from the study indicate that financial access or financial inclusion and financial stability is what increases financial innovation and boosts economic growth instead of mere financial sector development at a broader level. , Thesis (MCom) -- Faculty of Management and Commerce, 2023
- Full Text:
Effectiveness of monetary policy transmission mechanism: the case of selected SADC countries
- Tengwa, Anakho https://orcid.org/0000-0002-0700-8668
- Authors: Tengwa, Anakho https://orcid.org/0000-0002-0700-8668
- Date: 2022-12
- Subjects: Monetary policy -- Africa, Southern , Transmission mechanism (Monetary policy) -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26863 , vital:66037
- Description: Monetary policy plays a significant role in countries economic development. The variability in inflation in the SADC region provides room to question the Effectiveness of the transmission of monetary policy as these countries experience inflation in different ways. The study analyses the effectiveness of monetary policy transmission mechanism on the selected 5 SADC countries, South Africa, Botswana, Mauritius, Tanzania, and Zambia. The selection of the countries was mainly based on data availability. To answer the study hypothesis, the study used secondary data from different data sources, employing the Vector Autoregression Regression. The different channels analysed include the exchange rate, interest rates as well as credit channel to measure monetary policy tools. The main variables are, Gross Domestic Product (GDP), Consumer Price Index (CPI)cpi and money supply. Panel unit root was tested to test the stationarity of the variables and the appropriate lag length was determined. Panel VAR model was estimated where the focus was mainly on variance decomposition and impulse response. Then lastly the stability of the model was tested using diagnostic test. The results revealed that interest rates channel and exchange rate channel have a more significant effect in explaining the transmission of macroeconomic shock to the rest of the economy through gpd and cpi. While the credit channel mostly transmits to the rest of the economy through money supply and cpi, its effects from GDP are rather insignificant. It is also noted that interest rates serve as the dominant channel in transmitting monetary policy shocks to the rest of the economy. When central banks decrease prime lending rates for commercial banks, this is passed to consumers making it less expensive to borrow. In the long run, attracts foreign investors which harms the domestic currency. The author has noted that future research could focus on how asset price channel affects the economy. , Thesis (MCom) -- Faculty of Management and Commerce, 2022
- Full Text:
- Authors: Tengwa, Anakho https://orcid.org/0000-0002-0700-8668
- Date: 2022-12
- Subjects: Monetary policy -- Africa, Southern , Transmission mechanism (Monetary policy) -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26863 , vital:66037
- Description: Monetary policy plays a significant role in countries economic development. The variability in inflation in the SADC region provides room to question the Effectiveness of the transmission of monetary policy as these countries experience inflation in different ways. The study analyses the effectiveness of monetary policy transmission mechanism on the selected 5 SADC countries, South Africa, Botswana, Mauritius, Tanzania, and Zambia. The selection of the countries was mainly based on data availability. To answer the study hypothesis, the study used secondary data from different data sources, employing the Vector Autoregression Regression. The different channels analysed include the exchange rate, interest rates as well as credit channel to measure monetary policy tools. The main variables are, Gross Domestic Product (GDP), Consumer Price Index (CPI)cpi and money supply. Panel unit root was tested to test the stationarity of the variables and the appropriate lag length was determined. Panel VAR model was estimated where the focus was mainly on variance decomposition and impulse response. Then lastly the stability of the model was tested using diagnostic test. The results revealed that interest rates channel and exchange rate channel have a more significant effect in explaining the transmission of macroeconomic shock to the rest of the economy through gpd and cpi. While the credit channel mostly transmits to the rest of the economy through money supply and cpi, its effects from GDP are rather insignificant. It is also noted that interest rates serve as the dominant channel in transmitting monetary policy shocks to the rest of the economy. When central banks decrease prime lending rates for commercial banks, this is passed to consumers making it less expensive to borrow. In the long run, attracts foreign investors which harms the domestic currency. The author has noted that future research could focus on how asset price channel affects the economy. , Thesis (MCom) -- Faculty of Management and Commerce, 2022
- Full Text:
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