Determinants of Foreign Direct Investments into the Southern African Development Community Region: The case of financial sector development, institutional quality and financial openness
- Authors: Makalima, Sisonke
- Date: 2022-03
- Subjects: Investments, Foreign -- Africa , International finance , Monetary policy
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/21954 , vital:51855
- Description: The SADC region is a 15-member states grouping. Countries in the region have experienced low growth coupled with high levels of poverty and inequality. Attracting FDI to the region has been top priority. However, much is still to be realised. The study employed the Generalised Method of Moments (GMM) technique for the period 1980 to 2019. Empirical results show that financial sector development and financial openness are important determinants of foreign direct investment (FDI) inflows. The results also showed that institutional quality is also a very important variable in determining the inflow of FDI, even though its effect is conditional on financial sector development and financial openness. These results imply that countries with good institutional framework, as well as a developed financial sector and are financially open tend to attract more capital inflows in the form of FDI, thereby creating adequate conditions to boost private sector and investment abroad. Countries in the SADC region should therefore pursue policies which are aimed at improving the institutional framework, the level of financial sector development and further enhance the openness of their financial openness. , Thesis (MCom,) -- Faculty of Management and Commerce, 2022
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- Authors: Makalima, Sisonke
- Date: 2022-03
- Subjects: Investments, Foreign -- Africa , International finance , Monetary policy
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/21954 , vital:51855
- Description: The SADC region is a 15-member states grouping. Countries in the region have experienced low growth coupled with high levels of poverty and inequality. Attracting FDI to the region has been top priority. However, much is still to be realised. The study employed the Generalised Method of Moments (GMM) technique for the period 1980 to 2019. Empirical results show that financial sector development and financial openness are important determinants of foreign direct investment (FDI) inflows. The results also showed that institutional quality is also a very important variable in determining the inflow of FDI, even though its effect is conditional on financial sector development and financial openness. These results imply that countries with good institutional framework, as well as a developed financial sector and are financially open tend to attract more capital inflows in the form of FDI, thereby creating adequate conditions to boost private sector and investment abroad. Countries in the SADC region should therefore pursue policies which are aimed at improving the institutional framework, the level of financial sector development and further enhance the openness of their financial openness. , Thesis (MCom,) -- Faculty of Management and Commerce, 2022
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The impact of foreign capital inflow on domestic savings in South Africa
- Authors: Mhloluvele, Nonkuthalo
- Date: 2017
- Subjects: Investments, Foreign -- South Africa , Capital movements -- South Africa , International finance
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/29387 , vital:77960
- Description: This study examined the impact of foreign capital inflow on domestic savings in South Africa. Data was extracted from the World Bank from 1990-2014. The study employed the Johansen co-integration technique to analyse the long run relationship between the variables of interest. Having established the presence of co-integration, the vector error correction model was also estimated to analyse the short run interaction between the variables. The long run results illustrated that there is a positive relationship between domestic savings and foreign direct investment, remittances and GDP per capita, while on the other hand there is a negative relationship between domestic savings, interest rate and ODA. Granger causality tests were also conducted and the results indicate that the different forms of external financial flows Granger cause savings in South Africa. What is interesting from the empirical results is the negative relationship between interest rate and domestic savings which implies that South Africans are net borrowers as the income effect surpasses the substitution effect. This in part explains the low levels of domestic savings being experienced by South Africa since an increase in interest rate results in people paying more debt and this will reduce domestic savings. In addition, the results also suggest that foreign capital flows complement savings in South Africa. , Thesis (MCom) -- Faculty of Management and Commerce, 2017
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- Authors: Mhloluvele, Nonkuthalo
- Date: 2017
- Subjects: Investments, Foreign -- South Africa , Capital movements -- South Africa , International finance
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/29387 , vital:77960
- Description: This study examined the impact of foreign capital inflow on domestic savings in South Africa. Data was extracted from the World Bank from 1990-2014. The study employed the Johansen co-integration technique to analyse the long run relationship between the variables of interest. Having established the presence of co-integration, the vector error correction model was also estimated to analyse the short run interaction between the variables. The long run results illustrated that there is a positive relationship between domestic savings and foreign direct investment, remittances and GDP per capita, while on the other hand there is a negative relationship between domestic savings, interest rate and ODA. Granger causality tests were also conducted and the results indicate that the different forms of external financial flows Granger cause savings in South Africa. What is interesting from the empirical results is the negative relationship between interest rate and domestic savings which implies that South Africans are net borrowers as the income effect surpasses the substitution effect. This in part explains the low levels of domestic savings being experienced by South Africa since an increase in interest rate results in people paying more debt and this will reduce domestic savings. In addition, the results also suggest that foreign capital flows complement savings in South Africa. , Thesis (MCom) -- Faculty of Management and Commerce, 2017
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The effect of foreign direct investment on economic growth: evidence from South Africa
- Authors: Mazenda, Adrino
- Date: 2012
- Subjects: International Monetary Fund , Investments, Foreign -- South Africa , Economic development -- South Africa , International finance , Finance -- Developing countries
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11462 , http://hdl.handle.net/10353/d1007027 , International Monetary Fund , Investments, Foreign -- South Africa , Economic development -- South Africa , International finance , Finance -- Developing countries
- Description: Foreign direct investment amongst other mechanisms provides capital inflow meant to stimulate economic growth. Apart from promoting economic growth, FDI can also lead to increase in employment, technology, technical knowhow and managerial skills. South Africa has implemented various policy initiatives in attempts to attract foreign investment. This study investigates on the effect of foreign direct investment on economic growth, with particular reference to the South African economy. The period of study is from 1980 to 2010. The study begins by reviewing literature on economic growth and foreign direct investment. South Africa’s macroeconomic background is examined to determine the trends in FDI inflows and economic growth. An empirical model linking theoretical and empirical literature on the effect of FDI on economic growth is estimated using the Johansen cointegration and VECM framework. Variables specified in the methodology include real gross domestic product (RGDP), foreign direct investment (FDI), domestic investment (INVE), real exchange rate (REXCH) and foreign marketable debt (DEBT). The long run results showed that FDI, REXCH and DEBT have a negative impact on growth. INVE has a positive impact on growth. Short run results indicated that there is no strong pressure on RGDP to restore long-run equilibrium whenever there is a disturbance. The short run lag of FDI was found to exert a positive impact on growth. The impulse response and variance decomposition analysis complemented the long and short-run findings. Shocks on REXCH, and DEBT generated a negative response on RGDP. The shocks were not significantly different from zero and were transitory. Results from the variance decomposition analysis revealed that the fundamentals explain some, but not all, of the variations of RGDP. For the fifth year forecast error variance RGDP explains the largest component of the variation followed by INVE, REXCH, FDI and DEBT. After a period of ten years, the influence of RGDP and INVE declines, whereas REXCH, FDI and DEBT increase. Conclusions and policy recommendations were made using these results.
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- Authors: Mazenda, Adrino
- Date: 2012
- Subjects: International Monetary Fund , Investments, Foreign -- South Africa , Economic development -- South Africa , International finance , Finance -- Developing countries
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11462 , http://hdl.handle.net/10353/d1007027 , International Monetary Fund , Investments, Foreign -- South Africa , Economic development -- South Africa , International finance , Finance -- Developing countries
- Description: Foreign direct investment amongst other mechanisms provides capital inflow meant to stimulate economic growth. Apart from promoting economic growth, FDI can also lead to increase in employment, technology, technical knowhow and managerial skills. South Africa has implemented various policy initiatives in attempts to attract foreign investment. This study investigates on the effect of foreign direct investment on economic growth, with particular reference to the South African economy. The period of study is from 1980 to 2010. The study begins by reviewing literature on economic growth and foreign direct investment. South Africa’s macroeconomic background is examined to determine the trends in FDI inflows and economic growth. An empirical model linking theoretical and empirical literature on the effect of FDI on economic growth is estimated using the Johansen cointegration and VECM framework. Variables specified in the methodology include real gross domestic product (RGDP), foreign direct investment (FDI), domestic investment (INVE), real exchange rate (REXCH) and foreign marketable debt (DEBT). The long run results showed that FDI, REXCH and DEBT have a negative impact on growth. INVE has a positive impact on growth. Short run results indicated that there is no strong pressure on RGDP to restore long-run equilibrium whenever there is a disturbance. The short run lag of FDI was found to exert a positive impact on growth. The impulse response and variance decomposition analysis complemented the long and short-run findings. Shocks on REXCH, and DEBT generated a negative response on RGDP. The shocks were not significantly different from zero and were transitory. Results from the variance decomposition analysis revealed that the fundamentals explain some, but not all, of the variations of RGDP. For the fifth year forecast error variance RGDP explains the largest component of the variation followed by INVE, REXCH, FDI and DEBT. After a period of ten years, the influence of RGDP and INVE declines, whereas REXCH, FDI and DEBT increase. Conclusions and policy recommendations were made using these results.
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