An empirical application of the Tobin’s Q theory in housing investments in South Africa
- Authors: Sitima, Innocent
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11474 , http://hdl.handle.net/10353/d1013581
- Description: This study examines the patterns in the housing investments in South Africa in an attempt to understand if the possibility of the Tobin Q can be used to interpret the patterns and trends in the South African residential investments. The study, in its quest to explore and expose this intermporal relationship, it makes use of the South African annual time series data from 1960- 2010. The data was computed in different economic and econometric analysis software for better and reliable output, depending on the different level econometric technique that is required and need to be captured by the study. The dynamic investment equation is estimated using general- to- specific ARDL approach to magnify this connection and trends. The study established that combined asset prices and the levels of residential investment affect the long run investment performance rather than the Tobin Q. In the short run the lagged values of the Q, Business investment and residential investments seemed to be influential driving forces of private investment in South Africa. Even if the capital reserves in South Africa seem to be healthy, there is always a dire call for policy to be geared in the direction of the accessibility of credit to guarantee a supplementary conducive investment climate.
- Full Text:
- Date Issued: 2013
- Authors: Sitima, Innocent
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11474 , http://hdl.handle.net/10353/d1013581
- Description: This study examines the patterns in the housing investments in South Africa in an attempt to understand if the possibility of the Tobin Q can be used to interpret the patterns and trends in the South African residential investments. The study, in its quest to explore and expose this intermporal relationship, it makes use of the South African annual time series data from 1960- 2010. The data was computed in different economic and econometric analysis software for better and reliable output, depending on the different level econometric technique that is required and need to be captured by the study. The dynamic investment equation is estimated using general- to- specific ARDL approach to magnify this connection and trends. The study established that combined asset prices and the levels of residential investment affect the long run investment performance rather than the Tobin Q. In the short run the lagged values of the Q, Business investment and residential investments seemed to be influential driving forces of private investment in South Africa. Even if the capital reserves in South Africa seem to be healthy, there is always a dire call for policy to be geared in the direction of the accessibility of credit to guarantee a supplementary conducive investment climate.
- Full Text:
- Date Issued: 2013
An exploratory study of female labour force participation in South Africa: 1995 - 2010
- Authors: Mahali, Lesala
- Date: 2013
- Subjects: Labor markets -- South Africa , Unemployment -- South Africa , Labor supply -- South Africa , Women -- Employment -- South Africa , Role conflict , Women employees -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11465 , http://hdl.handle.net/10353/d1007050 , Labor markets -- South Africa , Unemployment -- South Africa , Labor supply -- South Africa , Women -- Employment -- South Africa , Role conflict , Women employees -- South Africa
- Description: The role that women play in the economy of any society is a desirable goal for equity and efficiency considerations. Just as with the rest of the world, the South African women lagged behind their male counterparts within the economic empowerment space and in the formal labour force. However, the role of women has undergone some transformations with issues relating to employment opportunities, such that their labour force participation has risen considerably since 1994. The female labour force participation rate is still seen to be persistently lower compared to the male participation rate even in the second decade of democracy. The rate of women labour force participation is even lower than the average. On the other hand, the increases have also been coupled with the rising rate of unemployment among women. The objective of this study was to investigate the determinants of female labour force participation in the South African labour market. The study uses a regression analysis on a cross sectional panel data covering a period of 1995 to 2010. Unlike most popular beliefs, the findings of this study reveal that fertility though not statistically significant, positively influences labour force participation of women. Other variables that are statistically significant in explaining female labour force are HIV/AIDS, marital status, age, household income and education. Race was found to be insignificant in explaining female labour force participation in the South African labour force.
- Full Text:
- Date Issued: 2013
- Authors: Mahali, Lesala
- Date: 2013
- Subjects: Labor markets -- South Africa , Unemployment -- South Africa , Labor supply -- South Africa , Women -- Employment -- South Africa , Role conflict , Women employees -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11465 , http://hdl.handle.net/10353/d1007050 , Labor markets -- South Africa , Unemployment -- South Africa , Labor supply -- South Africa , Women -- Employment -- South Africa , Role conflict , Women employees -- South Africa
- Description: The role that women play in the economy of any society is a desirable goal for equity and efficiency considerations. Just as with the rest of the world, the South African women lagged behind their male counterparts within the economic empowerment space and in the formal labour force. However, the role of women has undergone some transformations with issues relating to employment opportunities, such that their labour force participation has risen considerably since 1994. The female labour force participation rate is still seen to be persistently lower compared to the male participation rate even in the second decade of democracy. The rate of women labour force participation is even lower than the average. On the other hand, the increases have also been coupled with the rising rate of unemployment among women. The objective of this study was to investigate the determinants of female labour force participation in the South African labour market. The study uses a regression analysis on a cross sectional panel data covering a period of 1995 to 2010. Unlike most popular beliefs, the findings of this study reveal that fertility though not statistically significant, positively influences labour force participation of women. Other variables that are statistically significant in explaining female labour force are HIV/AIDS, marital status, age, household income and education. Race was found to be insignificant in explaining female labour force participation in the South African labour force.
- Full Text:
- Date Issued: 2013
Central Bank policy and the exchange rate under an inflation targeting regime: a case dtudy of South Africa
- Authors: Gonzo, Prosper
- Date: 2013
- Subjects: Foreign exchange rates -- Government policy -- South Africa , Inflation (Finance) -- South Africa , Monetary policy -- South Africa , Banks and banking, Central -- South Africa , South Africa -- Economic conditions , Banking industry -- Finance -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11476 , http://hdl.handle.net/10353/d1015043 , Foreign exchange rates -- Government policy -- South Africa , Inflation (Finance) -- South Africa , Monetary policy -- South Africa , Banks and banking, Central -- South Africa , South Africa -- Economic conditions , Banking industry -- Finance -- South Africa
- Description: This work examined the optimality of the inclusion of the exchange rate in the reaction function of the Central Bank in an inflation targeting framework. The study attempts to answer the question whether the exchange rate should have an independent role in an open economy Taylor-type rule. To this end, a Taylor-type rule is incorporating the exchange rate is estimated by the cointegration and vector error correction modeling (VECM) using quarterly data for the period of 1995 to 2009. The empirical studies point out the importance of the exchange rates in explaining and forecasting the behaviour of the South African Reserve Bank monetary policy control variable.
- Full Text:
- Date Issued: 2013
- Authors: Gonzo, Prosper
- Date: 2013
- Subjects: Foreign exchange rates -- Government policy -- South Africa , Inflation (Finance) -- South Africa , Monetary policy -- South Africa , Banks and banking, Central -- South Africa , South Africa -- Economic conditions , Banking industry -- Finance -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11476 , http://hdl.handle.net/10353/d1015043 , Foreign exchange rates -- Government policy -- South Africa , Inflation (Finance) -- South Africa , Monetary policy -- South Africa , Banks and banking, Central -- South Africa , South Africa -- Economic conditions , Banking industry -- Finance -- South Africa
- Description: This work examined the optimality of the inclusion of the exchange rate in the reaction function of the Central Bank in an inflation targeting framework. The study attempts to answer the question whether the exchange rate should have an independent role in an open economy Taylor-type rule. To this end, a Taylor-type rule is incorporating the exchange rate is estimated by the cointegration and vector error correction modeling (VECM) using quarterly data for the period of 1995 to 2009. The empirical studies point out the importance of the exchange rates in explaining and forecasting the behaviour of the South African Reserve Bank monetary policy control variable.
- Full Text:
- Date Issued: 2013
Determinants of household savings in South Africa: an econometric approach
- Authors: Chipote, Precious
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11479 , http://hdl.handle.net/10353/d1015281
- Description: Savings play a crucial role in promoting economic growth through their effect on investments. In addition, savings cushion the economy against fluctuating international capital flows. In periods of low or fluctuating capital, domestic savings are essential to finance high levels of capital formation thereby leading to increased productivity and sustainable economic growth. In South Africa saving levels have been declining, particularly household savings. This has been a major cause of concern as low savings hinder economic growth. In light of this, the study explored the determinants of household savings in South Africa over the period 1990 to 2011 using quarterly data. Based on the review of the theoretical and empirical literature, particular attention was paid to the effects of age dependency ratio, the level of household income, inflation and real interest rate on household savings. Apart from informal graphical test, the study employed the Augmented Dickey-Fuller and Phillips Perron unit root tests to test for stationarity in the time series. To identify the long-run and short-run dynamics among the variables, the study used the Johansen co-integration and the Error Correction Mechanism. Results of the study indicated that age dependency ratio, inflation and real interest rate have a positive impact on household savings whilst income has a negative long run relationship with household savings. In addition, the findings revealed that income, inflation and real interest rate play a major role in determining household savings whereas age dependency ratio is insignificant. The study recommends that the government should employ a countercyclical fiscal policy to avoid the development of excessive current account deficits during periods of more rapid economic growth, rising investment and falling saving.
- Full Text:
- Date Issued: 2013
- Authors: Chipote, Precious
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11479 , http://hdl.handle.net/10353/d1015281
- Description: Savings play a crucial role in promoting economic growth through their effect on investments. In addition, savings cushion the economy against fluctuating international capital flows. In periods of low or fluctuating capital, domestic savings are essential to finance high levels of capital formation thereby leading to increased productivity and sustainable economic growth. In South Africa saving levels have been declining, particularly household savings. This has been a major cause of concern as low savings hinder economic growth. In light of this, the study explored the determinants of household savings in South Africa over the period 1990 to 2011 using quarterly data. Based on the review of the theoretical and empirical literature, particular attention was paid to the effects of age dependency ratio, the level of household income, inflation and real interest rate on household savings. Apart from informal graphical test, the study employed the Augmented Dickey-Fuller and Phillips Perron unit root tests to test for stationarity in the time series. To identify the long-run and short-run dynamics among the variables, the study used the Johansen co-integration and the Error Correction Mechanism. Results of the study indicated that age dependency ratio, inflation and real interest rate have a positive impact on household savings whilst income has a negative long run relationship with household savings. In addition, the findings revealed that income, inflation and real interest rate play a major role in determining household savings whereas age dependency ratio is insignificant. The study recommends that the government should employ a countercyclical fiscal policy to avoid the development of excessive current account deficits during periods of more rapid economic growth, rising investment and falling saving.
- Full Text:
- Date Issued: 2013
Dynamic linkages between monetary policy and the stock market: the case of South Africa
- Authors: Mabitle, Mope
- Date: 2013
- Subjects: Johannesburg Stock Exchange , South African Reserve Bank , Monetary policy -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11483 , http://hdl.handle.net/10353/d1015290 , Johannesburg Stock Exchange , South African Reserve Bank , Monetary policy -- South Africa
- Description: This study analyses the linkage between monetary policy and the stock market in South Africa using monthly data for the period from 2000 to 2010. It provides an overview of the Johannesburg Stock Exchange and the monetary regimes adopted by the South African Reserve Bank since the 1960s and the interrelation between the monetary variables and the stock market. It also provides a review of literature, both theoretical and empirical on the linkages between the two variables. Based on the review of literature, a Vector Autoregression [VAR] model was chosen as a method of analyzing the relationship between the two variables. The empirical results revealed that there is no long term relationship between the variables, however, in the short-run there is a dynamic relationship between monetary policy and the stock market in South Africa. This implies that innovations in the stock market affect the implementation of monetary policy and vice-versa. The study recommended that monetary authorities should pay attention to the fact that the stock market performance has a great impact on their decision making due to the fact it is greatly affected by repo rates.
- Full Text:
- Date Issued: 2013
- Authors: Mabitle, Mope
- Date: 2013
- Subjects: Johannesburg Stock Exchange , South African Reserve Bank , Monetary policy -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11483 , http://hdl.handle.net/10353/d1015290 , Johannesburg Stock Exchange , South African Reserve Bank , Monetary policy -- South Africa
- Description: This study analyses the linkage between monetary policy and the stock market in South Africa using monthly data for the period from 2000 to 2010. It provides an overview of the Johannesburg Stock Exchange and the monetary regimes adopted by the South African Reserve Bank since the 1960s and the interrelation between the monetary variables and the stock market. It also provides a review of literature, both theoretical and empirical on the linkages between the two variables. Based on the review of literature, a Vector Autoregression [VAR] model was chosen as a method of analyzing the relationship between the two variables. The empirical results revealed that there is no long term relationship between the variables, however, in the short-run there is a dynamic relationship between monetary policy and the stock market in South Africa. This implies that innovations in the stock market affect the implementation of monetary policy and vice-versa. The study recommended that monetary authorities should pay attention to the fact that the stock market performance has a great impact on their decision making due to the fact it is greatly affected by repo rates.
- Full Text:
- Date Issued: 2013
Econometric analysis of labour demand in the South African textiles, clothing and footwear manufacturing sector: 1990-2012
- Authors: Chikwanha, Tafadzwa R
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11498 , http://hdl.handle.net/10353/d1018551
- Description: South Africa in its quest for socio-economic improvement still faces the problem of persistent unemployment. Unemployment in South Africa is very intricate and therefore makes it a complex challenge to tackle for policy makers. Differing unemployment phenomena exist in different sectors of the economy. Some sectors are facing employment growth while others are declining. This study examines the possible major determinants of labour demand (employment) in the textiles, clothing and footwear manufacturing sector in South Africa. The study is based on semi-annual time series data from 1990 to 2012. The Johansen (1991) model is used to examine the trends. The model is an error correction model imposed upon a vector autoregressive model. The results obtained showed that wages and imports both have negative relationships with the demand for workers. Based on these two important results, policy recommendations were made. The study recommended the introduction of a sector-based wage subsidy. The wage structure in South Africa is a perpetually problematic factor of the labour market and therefore a significant determinant in the viability of business and investment. Secondly, the import structure on textiles, clothing and footwear is not clearly and thoroughly setup. A complete restructuring of import tariffs on the entire sector is suggested.
- Full Text:
- Date Issued: 2013
- Authors: Chikwanha, Tafadzwa R
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11498 , http://hdl.handle.net/10353/d1018551
- Description: South Africa in its quest for socio-economic improvement still faces the problem of persistent unemployment. Unemployment in South Africa is very intricate and therefore makes it a complex challenge to tackle for policy makers. Differing unemployment phenomena exist in different sectors of the economy. Some sectors are facing employment growth while others are declining. This study examines the possible major determinants of labour demand (employment) in the textiles, clothing and footwear manufacturing sector in South Africa. The study is based on semi-annual time series data from 1990 to 2012. The Johansen (1991) model is used to examine the trends. The model is an error correction model imposed upon a vector autoregressive model. The results obtained showed that wages and imports both have negative relationships with the demand for workers. Based on these two important results, policy recommendations were made. The study recommended the introduction of a sector-based wage subsidy. The wage structure in South Africa is a perpetually problematic factor of the labour market and therefore a significant determinant in the viability of business and investment. Secondly, the import structure on textiles, clothing and footwear is not clearly and thoroughly setup. A complete restructuring of import tariffs on the entire sector is suggested.
- Full Text:
- Date Issued: 2013
Effects of exchange rate volatility on the stock market: a case study of South Africa
- Authors: Mlambo, Courage
- Date: 2013
- Subjects: Foreign exchange rates -- South Africa , Currency question -- South Africa , Free trade -- South Africa , Capital movements -- South Africa , Cointegration -- South Africa , Investments, Foreign , International trade , Stock exchanges -- South Africa , South Africa -- Economic policy
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11468 , http://hdl.handle.net/10353/d1007125 , Foreign exchange rates -- South Africa , Currency question -- South Africa , Free trade -- South Africa , Capital movements -- South Africa , Cointegration -- South Africa , Investments, Foreign , International trade , Stock exchanges -- South Africa , South Africa -- Economic policy
- Description: This study assessed the effects of currency volatility on the Johannesburg Stock Exchange. An evaluation of literature on exchange rate volatility and stock markets was conducted resulting into specification of an empirical model.The Generalised Autoregressive Conditional Heteroskedascity (1.1) (GARCH) model was used in establishing the relationship between exchange rate volatility and stock market performance. The study employed monthly South African data for the period 2000 – 2010. The data frequency selected ensured an adequate number of observations. A very weak relationship between currency volatility and the stock market was confirmed. The research finding is supported by previous studies. Prime overdraft rate and total mining production were found to have a negative impact on Market capitalisation. Surprisingly, US interest rates were found to have a positive impact on Market capitalisation. This study recommended that, since the South African stock market is not really exposed to the negative effects of currency volatility, government can use exchange rate as a policy tool to attract foreign portfolio investment. The weak relationship between currency volatility and the stock market suggests that the JSE can be marketed as a safe market for foreign investors. However, investors, bankers and portfolio managers still need to be vigilant in regard to the spillovers from the foreign exchange rate into the stock market. Although there is a weak relationship between rand volatility and the stock market in South Africa, this does not necessarily mean that investors and portfolio managers need not monitor the developments between these two variables.
- Full Text:
- Date Issued: 2013
- Authors: Mlambo, Courage
- Date: 2013
- Subjects: Foreign exchange rates -- South Africa , Currency question -- South Africa , Free trade -- South Africa , Capital movements -- South Africa , Cointegration -- South Africa , Investments, Foreign , International trade , Stock exchanges -- South Africa , South Africa -- Economic policy
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11468 , http://hdl.handle.net/10353/d1007125 , Foreign exchange rates -- South Africa , Currency question -- South Africa , Free trade -- South Africa , Capital movements -- South Africa , Cointegration -- South Africa , Investments, Foreign , International trade , Stock exchanges -- South Africa , South Africa -- Economic policy
- Description: This study assessed the effects of currency volatility on the Johannesburg Stock Exchange. An evaluation of literature on exchange rate volatility and stock markets was conducted resulting into specification of an empirical model.The Generalised Autoregressive Conditional Heteroskedascity (1.1) (GARCH) model was used in establishing the relationship between exchange rate volatility and stock market performance. The study employed monthly South African data for the period 2000 – 2010. The data frequency selected ensured an adequate number of observations. A very weak relationship between currency volatility and the stock market was confirmed. The research finding is supported by previous studies. Prime overdraft rate and total mining production were found to have a negative impact on Market capitalisation. Surprisingly, US interest rates were found to have a positive impact on Market capitalisation. This study recommended that, since the South African stock market is not really exposed to the negative effects of currency volatility, government can use exchange rate as a policy tool to attract foreign portfolio investment. The weak relationship between currency volatility and the stock market suggests that the JSE can be marketed as a safe market for foreign investors. However, investors, bankers and portfolio managers still need to be vigilant in regard to the spillovers from the foreign exchange rate into the stock market. Although there is a weak relationship between rand volatility and the stock market in South Africa, this does not necessarily mean that investors and portfolio managers need not monitor the developments between these two variables.
- Full Text:
- Date Issued: 2013
Factors influencing market orientation in SME computer retailers in Buffalo city metropolitan, South Africa
- Authors: Moyo, Hazel Nobandile
- Date: 2013
- Subjects: Marketing -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: http://hdl.handle.net/10353/d1010689 , vital:26496
- Description: Despite the significant contribution to socio-economic development by SMEs (small and medium enterprises), their failure rate is very high in South Africa. Adoption and implementation of market orientation has been identified by various scholars as a means to mitigate SME failure in the highly competitive environments they operate in. This study investigated the factors influencing market orientation in SME computer retailers in King Williams Town and East London, South Africa. The objectives of the study were to investigate whether owner/manager involvement of had an influence on market orientation in SME computer retailers, to establish whether organisational systems and interdepartmental dynamics had an impact on the customer focused culture as well as investigate whether competitive intensity influenced the SME computer retailers to be market focused. Both primary and secondary data sources were used in this study. A quantitative research design was used in conducting this research. Simple random sampling, a probability sampling technique was used to select a sample of 104 from the sample frame of 141 registered SME computer retailers. The survey method, by way of a selfadministered questionnaire was used to collect primary data. The statistical Package for Social Sciences (SPSS) as statistical software was used to analyse data. The Chi-square test, Pearson correlation, the t-test, and descriptive statistics were used to analyse data. The findings of this research found that there are factors influencing market orientation in SME computer retailers, such as owner/manager involvement. Competitive intensity was found to influence SME computer retailers to be market focused. It was also found that organisational systems and interdepartmental dynamics did not impact on the customer focused culture. The findings of this research showed that SME owner/managers hold the key to shaping an organisation‟s values and culture orientation therefore in order to be market orientated, they need pass on a clear message to the lower levels of the organisation. The careful implementation of organisational systems and interdepartmental dynamics that encourage market orientation as well as constant matching and monitoring of competitors was recommended to enable SMEs to be market orientated and in turn improve their business performance and success.
- Full Text:
- Date Issued: 2013
- Authors: Moyo, Hazel Nobandile
- Date: 2013
- Subjects: Marketing -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: http://hdl.handle.net/10353/d1010689 , vital:26496
- Description: Despite the significant contribution to socio-economic development by SMEs (small and medium enterprises), their failure rate is very high in South Africa. Adoption and implementation of market orientation has been identified by various scholars as a means to mitigate SME failure in the highly competitive environments they operate in. This study investigated the factors influencing market orientation in SME computer retailers in King Williams Town and East London, South Africa. The objectives of the study were to investigate whether owner/manager involvement of had an influence on market orientation in SME computer retailers, to establish whether organisational systems and interdepartmental dynamics had an impact on the customer focused culture as well as investigate whether competitive intensity influenced the SME computer retailers to be market focused. Both primary and secondary data sources were used in this study. A quantitative research design was used in conducting this research. Simple random sampling, a probability sampling technique was used to select a sample of 104 from the sample frame of 141 registered SME computer retailers. The survey method, by way of a selfadministered questionnaire was used to collect primary data. The statistical Package for Social Sciences (SPSS) as statistical software was used to analyse data. The Chi-square test, Pearson correlation, the t-test, and descriptive statistics were used to analyse data. The findings of this research found that there are factors influencing market orientation in SME computer retailers, such as owner/manager involvement. Competitive intensity was found to influence SME computer retailers to be market focused. It was also found that organisational systems and interdepartmental dynamics did not impact on the customer focused culture. The findings of this research showed that SME owner/managers hold the key to shaping an organisation‟s values and culture orientation therefore in order to be market orientated, they need pass on a clear message to the lower levels of the organisation. The careful implementation of organisational systems and interdepartmental dynamics that encourage market orientation as well as constant matching and monitoring of competitors was recommended to enable SMEs to be market orientated and in turn improve their business performance and success.
- Full Text:
- Date Issued: 2013
Financial structure and economic growth nexus: comparisons of banks, financial markets and economic growth in South Africa
- Authors: Godza, Praise G
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: http://hdl.handle.net/10353/921 , vital:26509
- Description: The importance of the financial structure system, which comprises the banking sector and financial markets, to the growth of a country’s economy cannot be underestimated. It is important to analyse comparatively the contribution of each sector to the economic growth of a country. This study, therefore, empirically examined the relationship between financial markets, banks and economic growth in South Africa using time series analysis for the period 1990 to 2011. The study used the Vector Error Correction model (VECM) based causality tests to establish the link between financial structure (represented by both banks and financial markets) and economic growth. Real GDP was used as a measure for economic growth, Bank credit to the private sector was used as a proxy for the banking system, turnover ratio and value of shares traded was used as a measure for the stock market and bond market capitalisation was used as a measure for the bond market. To determine the net effects of financial structure on long run growth in South Africa, one control variable was added which was the ratio of government expenditure to GDP to control for the government’s role in the economy. The Johansen co-integration technique was also employed to obtain a long run relationship. The results from the study revealed that the stock turnover ratio, bond market capitalisation, and government expenditure have a long run relationship with economic growth while bank credit to private sector and value of shares traded showed a negative relationship with economic growth. With granger causality all the variables proved to granger cause economic growth except for bond market capitalisation where economic growth prove to granger cause bond market development. The study recommended that measures to improve liquidity, transparency and accessibility of both the banking sector and financial markets instruments should be a priority for South African authorities. The authorities should, therefore, encourage stock market development through an appropriate mix of taxes, legal and regulatory policies to remove barriers to stock market operations and thus enhance their efficiency since stock markets in Africa are underdeveloped. Strong financial regulation and supervision in banks to ensure efficiency in credit allocation should be done to enable channelling of credits to capital development rather than consumption spending.
- Full Text:
- Date Issued: 2013
- Authors: Godza, Praise G
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: http://hdl.handle.net/10353/921 , vital:26509
- Description: The importance of the financial structure system, which comprises the banking sector and financial markets, to the growth of a country’s economy cannot be underestimated. It is important to analyse comparatively the contribution of each sector to the economic growth of a country. This study, therefore, empirically examined the relationship between financial markets, banks and economic growth in South Africa using time series analysis for the period 1990 to 2011. The study used the Vector Error Correction model (VECM) based causality tests to establish the link between financial structure (represented by both banks and financial markets) and economic growth. Real GDP was used as a measure for economic growth, Bank credit to the private sector was used as a proxy for the banking system, turnover ratio and value of shares traded was used as a measure for the stock market and bond market capitalisation was used as a measure for the bond market. To determine the net effects of financial structure on long run growth in South Africa, one control variable was added which was the ratio of government expenditure to GDP to control for the government’s role in the economy. The Johansen co-integration technique was also employed to obtain a long run relationship. The results from the study revealed that the stock turnover ratio, bond market capitalisation, and government expenditure have a long run relationship with economic growth while bank credit to private sector and value of shares traded showed a negative relationship with economic growth. With granger causality all the variables proved to granger cause economic growth except for bond market capitalisation where economic growth prove to granger cause bond market development. The study recommended that measures to improve liquidity, transparency and accessibility of both the banking sector and financial markets instruments should be a priority for South African authorities. The authorities should, therefore, encourage stock market development through an appropriate mix of taxes, legal and regulatory policies to remove barriers to stock market operations and thus enhance their efficiency since stock markets in Africa are underdeveloped. Strong financial regulation and supervision in banks to ensure efficiency in credit allocation should be done to enable channelling of credits to capital development rather than consumption spending.
- Full Text:
- Date Issued: 2013
Impact of oil price on tourism in South Africa: an error correction model (ECM) analysis
- Authors: Gqozo, Pamela
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11486 , http://hdl.handle.net/10353/d1017941
- Description: The study focuses on the impact of oil price on tourism in South Africa. Quarterly time series data for the period 1990 to 2012 was used in this study. Error correction model is the research instrument that was used to determine the impact of oil price on tourism in South Africa. The explanatory variables in this study are oil price, real exchange rates, gross domestic product, consumer price index and transport infrastructure investment. The results of the study revealed that oil price, consumer price index and real exchange rate have a negative long run relationship on tourism, while gross domestic product and transport infrastructure investment had a positive long run relationship on tourism. It was also shown that oil price is statistically significant relationship on tourism.
- Full Text:
- Date Issued: 2013
- Authors: Gqozo, Pamela
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11486 , http://hdl.handle.net/10353/d1017941
- Description: The study focuses on the impact of oil price on tourism in South Africa. Quarterly time series data for the period 1990 to 2012 was used in this study. Error correction model is the research instrument that was used to determine the impact of oil price on tourism in South Africa. The explanatory variables in this study are oil price, real exchange rates, gross domestic product, consumer price index and transport infrastructure investment. The results of the study revealed that oil price, consumer price index and real exchange rate have a negative long run relationship on tourism, while gross domestic product and transport infrastructure investment had a positive long run relationship on tourism. It was also shown that oil price is statistically significant relationship on tourism.
- Full Text:
- Date Issued: 2013
Testing random walk hypothesis in the stock market prices: evidence from South Africa's stock exchange (2000- 2011)
- Chitenderu, Tafadzwa Thelmah
- Authors: Chitenderu, Tafadzwa Thelmah
- Date: 2013
- Subjects: Johannesburg Stock Exchange , Stock exchanges -- South Africa -- Johannesburg , Random walks (Mathematics)
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11461 , http://hdl.handle.net/10353/d1006931 , Johannesburg Stock Exchange , Stock exchanges -- South Africa -- Johannesburg , Random walks (Mathematics)
- Description: The Johannesburg Stock Exchange market was tested for the existence of the random walk hypothesis using All Share Index (ALSI) and time series data for the period between 2000 and 2011. The traditionally used methods, the unit root tests and autocorrelation test were employed first and they all confirmed that during the period under consideration, the JSE price index followed the random walk process. In addition, the ARIMA model was built and it was found that the ARIMA ( 1, 1, 1) was the model that best fitted the data in question. Furthermore, residual tests to help determine whether the residuals of the estimated equation show random walk process in the series were done. It was found that the ALSI resembles series that follow random walk hypothesis with strong evidence of RWH indicated in the conducted forecasting tests which showed vast variance between forecasted values and actual indicating little or no forecasting strength in the series. To further validate the findings in this research, the variance ratio test was conducted under heteroscedasticity and it also strongly corroborated that the existence of a random walk process cannot be rejected in the JSE. It was concluded that since the returns follow the random walk hypothesis, it can be said that JSE is efficient in the weak form level of the EMH and therefore opportunities of making excess returns based on out- performing the market is ruled out and is merely a game of chance. In other words, it will be of no use to choose stocks based on information about recent trends in stock prices.
- Full Text:
- Date Issued: 2013
- Authors: Chitenderu, Tafadzwa Thelmah
- Date: 2013
- Subjects: Johannesburg Stock Exchange , Stock exchanges -- South Africa -- Johannesburg , Random walks (Mathematics)
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11461 , http://hdl.handle.net/10353/d1006931 , Johannesburg Stock Exchange , Stock exchanges -- South Africa -- Johannesburg , Random walks (Mathematics)
- Description: The Johannesburg Stock Exchange market was tested for the existence of the random walk hypothesis using All Share Index (ALSI) and time series data for the period between 2000 and 2011. The traditionally used methods, the unit root tests and autocorrelation test were employed first and they all confirmed that during the period under consideration, the JSE price index followed the random walk process. In addition, the ARIMA model was built and it was found that the ARIMA ( 1, 1, 1) was the model that best fitted the data in question. Furthermore, residual tests to help determine whether the residuals of the estimated equation show random walk process in the series were done. It was found that the ALSI resembles series that follow random walk hypothesis with strong evidence of RWH indicated in the conducted forecasting tests which showed vast variance between forecasted values and actual indicating little or no forecasting strength in the series. To further validate the findings in this research, the variance ratio test was conducted under heteroscedasticity and it also strongly corroborated that the existence of a random walk process cannot be rejected in the JSE. It was concluded that since the returns follow the random walk hypothesis, it can be said that JSE is efficient in the weak form level of the EMH and therefore opportunities of making excess returns based on out- performing the market is ruled out and is merely a game of chance. In other words, it will be of no use to choose stocks based on information about recent trends in stock prices.
- Full Text:
- Date Issued: 2013
The impact of a budget deficit on transport infrastructure investment in South Africa
- Authors: Nanto, Aphiwe
- Date: 2013
- Subjects: Budget deficits -- South Africa , Infrastructure (Economics) -- South Africa , Transportation -- South Africa , Debts, Public -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11478 , http://hdl.handle.net/10353/d1015245 , Budget deficits -- South Africa , Infrastructure (Economics) -- South Africa , Transportation -- South Africa , Debts, Public -- South Africa
- Description: Persistent government budget deficits and government debt have become major concerns in both developed and developing countries. This study investigates the impact of a budget deficit on transport infrastructure investment in South Africa. Quarterly time series data, covering the period 1990q1- 2009q4, was used in this project. The study tests for stationarity using the Augmented Dickey- Fuller and Phillips Perron; it tests for cointegration using the Johansen (1991, 1995) methodology. A vector error correction model is used as an estimation technique. The results of this study show that a budget deficit has a negative impact on transport infrastructure investment in South Africa.
- Full Text:
- Date Issued: 2013
- Authors: Nanto, Aphiwe
- Date: 2013
- Subjects: Budget deficits -- South Africa , Infrastructure (Economics) -- South Africa , Transportation -- South Africa , Debts, Public -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11478 , http://hdl.handle.net/10353/d1015245 , Budget deficits -- South Africa , Infrastructure (Economics) -- South Africa , Transportation -- South Africa , Debts, Public -- South Africa
- Description: Persistent government budget deficits and government debt have become major concerns in both developed and developing countries. This study investigates the impact of a budget deficit on transport infrastructure investment in South Africa. Quarterly time series data, covering the period 1990q1- 2009q4, was used in this project. The study tests for stationarity using the Augmented Dickey- Fuller and Phillips Perron; it tests for cointegration using the Johansen (1991, 1995) methodology. A vector error correction model is used as an estimation technique. The results of this study show that a budget deficit has a negative impact on transport infrastructure investment in South Africa.
- Full Text:
- Date Issued: 2013
The impact of budget deficits on economic growth in South Africa
- Authors: Mrwebo, Luzuko T
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11481 , http://hdl.handle.net/10353/d1015284
- Description: The study examines the impact of budget deficits on economic growth in South Africa. The review of the results from theoretical and empirical studies has shown that budget deficits in the most have a negative impact on GDP growth. The Johansen cointegration test has shown evidence that there is cointegration between the GDP growth and its determinants. The tests indicated the presence of cointegration which led to the estimation of VECM. The measure for the long run relationship was between GDP growth and its determinants such as, budget deficits, domestic activities, government debt, and trade openness. The co-integration and vector error correction modelling techniques were applied to South African data between 1990 to 2012 period. This study at hand indicated that government budget deficits have a long run negative effect on economic growth, but the impact shown from the results of this study is very low.
- Full Text:
- Date Issued: 2013
- Authors: Mrwebo, Luzuko T
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11481 , http://hdl.handle.net/10353/d1015284
- Description: The study examines the impact of budget deficits on economic growth in South Africa. The review of the results from theoretical and empirical studies has shown that budget deficits in the most have a negative impact on GDP growth. The Johansen cointegration test has shown evidence that there is cointegration between the GDP growth and its determinants. The tests indicated the presence of cointegration which led to the estimation of VECM. The measure for the long run relationship was between GDP growth and its determinants such as, budget deficits, domestic activities, government debt, and trade openness. The co-integration and vector error correction modelling techniques were applied to South African data between 1990 to 2012 period. This study at hand indicated that government budget deficits have a long run negative effect on economic growth, but the impact shown from the results of this study is very low.
- Full Text:
- Date Issued: 2013
The impact of economic growth on unemployment in South Africa: 1994 -2012
- Authors: Handson, Banda
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: http://hdl.handle.net/10353/884 , vital:26506
- Description: One of the most pressing problems facing the South African economy is unemployment, which has been erratic over the past few years. This study examined the impact of economic growth on unemployment, using quarterly time series data for South Africa for the period 1994 to 2012. Johansen Co-integration reflected that there is stable and one significant long run relationship between unemployment and the explanatory variables that is economic growth (GDP), budget deficit (BUG), real effective exchange rate (REER) and labour productivity (LP). The study utilized Vector Error Correction Model (VECM) to determine the effects of macroeconomic variables thus REER, LP, GDP and BUG on unemployment in South Africa. The results of VECM indicated that LP has a negative long run impact on unemployment whilst GDP, BUG and REER have positive impact. The study resulted in the following policy recommendation: South African government should re-direct its spending towards activities that directly and indirectly promote creation of employment and decent jobs; a conducive environment and flexible labour market policies or legislations without impediments to employment creation should be created; and lastly government should prioritise industries that promote labour intensive. All this will help in absorbing large pools of the unemployed population thereby reducing unemployment in South Africa.
- Full Text:
- Date Issued: 2013
- Authors: Handson, Banda
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: http://hdl.handle.net/10353/884 , vital:26506
- Description: One of the most pressing problems facing the South African economy is unemployment, which has been erratic over the past few years. This study examined the impact of economic growth on unemployment, using quarterly time series data for South Africa for the period 1994 to 2012. Johansen Co-integration reflected that there is stable and one significant long run relationship between unemployment and the explanatory variables that is economic growth (GDP), budget deficit (BUG), real effective exchange rate (REER) and labour productivity (LP). The study utilized Vector Error Correction Model (VECM) to determine the effects of macroeconomic variables thus REER, LP, GDP and BUG on unemployment in South Africa. The results of VECM indicated that LP has a negative long run impact on unemployment whilst GDP, BUG and REER have positive impact. The study resulted in the following policy recommendation: South African government should re-direct its spending towards activities that directly and indirectly promote creation of employment and decent jobs; a conducive environment and flexible labour market policies or legislations without impediments to employment creation should be created; and lastly government should prioritise industries that promote labour intensive. All this will help in absorbing large pools of the unemployed population thereby reducing unemployment in South Africa.
- Full Text:
- Date Issued: 2013
The impact of fatal road accidents on the South African economy (1997-2011)
- Authors: Siswana, Babalwa
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11475 , http://hdl.handle.net/10353/d1013591
- Description: The purpose of the study is to examine the impact of fatal road accidents on the South African economy. The study used quarterly time series data for the period 1997 to 2011. A Johansen cointegration and vector error correction model (VCEM) was used to determine the impact of fatal road accidents on the South African economy. The explanatory variables in this study are labour productivity, real interest rates, unemployment and real exchange rates. Results from this study revealed that fatal road accidents have negatively impacted on the economic growth in South Africa while labour productivity, real interest rates, unemployment and real exchange rates have a positive long-run impact on economic growth in South Africa. This study recommends that road safety measures must be intensified in South Africa in order to maximize the benefits of economic growth. Keywords: Economic growth, fatal road accidents, South Africa
- Full Text:
- Date Issued: 2013
- Authors: Siswana, Babalwa
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11475 , http://hdl.handle.net/10353/d1013591
- Description: The purpose of the study is to examine the impact of fatal road accidents on the South African economy. The study used quarterly time series data for the period 1997 to 2011. A Johansen cointegration and vector error correction model (VCEM) was used to determine the impact of fatal road accidents on the South African economy. The explanatory variables in this study are labour productivity, real interest rates, unemployment and real exchange rates. Results from this study revealed that fatal road accidents have negatively impacted on the economic growth in South Africa while labour productivity, real interest rates, unemployment and real exchange rates have a positive long-run impact on economic growth in South Africa. This study recommends that road safety measures must be intensified in South Africa in order to maximize the benefits of economic growth. Keywords: Economic growth, fatal road accidents, South Africa
- Full Text:
- Date Issued: 2013
The impact of foreign debt on economic growth in South Africa
- Authors: Shayanewako, V B
- Date: 2013
- Subjects: Debts, External -- South Africa -- Eastern Cape , Investments, Foreign -- South Africa , Government spending policy -- South Africa , Economic development -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11477 , http://hdl.handle.net/10353/d1015140 , Debts, External -- South Africa -- Eastern Cape , Investments, Foreign -- South Africa , Government spending policy -- South Africa , Economic development -- South Africa
- Description: This study analyses the economic impact between foreign debt and economic growth in South Africa. By fitting a production function model to annual data for the period 1980-2011, the study examines the dynamic effect of debt service, capital stock and labour force on the economic growth of the country. By following Cunningham (1993), it has identified the long-run and short-run causal relationships among the included variables. The results indicate that the debt servicing burden has a negative effect on the productivity of labour and capital, and thereby affect economic growth adversely. The results also illustrate that the debt service ratio tends to negatively affect GDP and the rate of economic growth in the long-run, which, in turn, reduces the ability of the country to service its debt. Similarly, the estimated error correction term shows the existence of a significant long-run causal relationship among the specified variables. Overall, the results suggest the existence of short-run and long-run causal relationships running from debt service to GDP.
- Full Text:
- Date Issued: 2013
- Authors: Shayanewako, V B
- Date: 2013
- Subjects: Debts, External -- South Africa -- Eastern Cape , Investments, Foreign -- South Africa , Government spending policy -- South Africa , Economic development -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11477 , http://hdl.handle.net/10353/d1015140 , Debts, External -- South Africa -- Eastern Cape , Investments, Foreign -- South Africa , Government spending policy -- South Africa , Economic development -- South Africa
- Description: This study analyses the economic impact between foreign debt and economic growth in South Africa. By fitting a production function model to annual data for the period 1980-2011, the study examines the dynamic effect of debt service, capital stock and labour force on the economic growth of the country. By following Cunningham (1993), it has identified the long-run and short-run causal relationships among the included variables. The results indicate that the debt servicing burden has a negative effect on the productivity of labour and capital, and thereby affect economic growth adversely. The results also illustrate that the debt service ratio tends to negatively affect GDP and the rate of economic growth in the long-run, which, in turn, reduces the ability of the country to service its debt. Similarly, the estimated error correction term shows the existence of a significant long-run causal relationship among the specified variables. Overall, the results suggest the existence of short-run and long-run causal relationships running from debt service to GDP.
- Full Text:
- Date Issued: 2013
The impact of oil price volatility on economic growth in South Africa: a cointegration approach
- Authors: Matekenya, Weliswa
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: http://hdl.handle.net/10353/876 , vital:26505
- Description: Oil is an essential commodity in the South African economy and a source of energy that is used for electricity generation, heating, and cooking. It is vital for the transportation system on which the very livelihood of the economy depends. 14% of South African primary energy needs are met by oil while 95% of crude oil is imported, primarily, from Saudi Arabia and Iran. This study investigates the impact of oil price volatility on economic growth in South Africa from 1994Q1-2010Q4. The study employs the VECM and shows that there exists both a long run and short run relationship between the following variables: crude oil price, GDP, gross fixed investment, real interest rate and real exchange rate. In a long-run analysis there is a positive relationship between oil price and GDP while there is negative relationship in the short-run. The study also shows that, as an oil importing country, South Africa‟s economic growth depends on imported oil which makes the country vulnerable to oil price shocks. Based on the findings of this study it is recommended that policy interventions should include both monetary and fiscal policies. It is in this regard that promoting a regional integration in order to reduce oil dependence, by optimizing electricity supplies across the region, is essential. This will improve efficiency and, owing to economies of scale, lower generation costs.
- Full Text:
- Date Issued: 2013
- Authors: Matekenya, Weliswa
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: http://hdl.handle.net/10353/876 , vital:26505
- Description: Oil is an essential commodity in the South African economy and a source of energy that is used for electricity generation, heating, and cooking. It is vital for the transportation system on which the very livelihood of the economy depends. 14% of South African primary energy needs are met by oil while 95% of crude oil is imported, primarily, from Saudi Arabia and Iran. This study investigates the impact of oil price volatility on economic growth in South Africa from 1994Q1-2010Q4. The study employs the VECM and shows that there exists both a long run and short run relationship between the following variables: crude oil price, GDP, gross fixed investment, real interest rate and real exchange rate. In a long-run analysis there is a positive relationship between oil price and GDP while there is negative relationship in the short-run. The study also shows that, as an oil importing country, South Africa‟s economic growth depends on imported oil which makes the country vulnerable to oil price shocks. Based on the findings of this study it is recommended that policy interventions should include both monetary and fiscal policies. It is in this regard that promoting a regional integration in order to reduce oil dependence, by optimizing electricity supplies across the region, is essential. This will improve efficiency and, owing to economies of scale, lower generation costs.
- Full Text:
- Date Issued: 2013
The impact of stock market development on economic growth: evidence from South Africa
- Authors: Vacu, Nomfundo Portia
- Date: 2013
- Subjects: Stock exchanges -- South Africa , Economic development -- South Africa , Stocks -- Economic aspects -- South Africa , South Africa -- Economic conditions , Stock market development , Economic growth , South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11655 , http://hdl.handle.net/10353/d1006983 , Stock exchanges -- South Africa , Economic development -- South Africa , Stocks -- Economic aspects -- South Africa , South Africa -- Economic conditions , Stock market development , Economic growth , South Africa
- Description: The main objective of this study is to examine the long run relationship between stock market development and economic growth in the case of South Africa. The study used quarterly data covering the period from 1990Q1 to 2010Q4. To empirically test the link between the two variables, the study used the Johnson’s cointegration approach and Granger causality so as to test the direction of the relationship. The Vector Error Correction Model was also employed to capture both short run and long run dynamics. Generally, the results reveal that a long run relationship exists between the two variables and the causality flows from economic growth to stock market development. Also, the extent to which of stock market development impacts on growth is statistically weak.
- Full Text:
- Date Issued: 2013
- Authors: Vacu, Nomfundo Portia
- Date: 2013
- Subjects: Stock exchanges -- South Africa , Economic development -- South Africa , Stocks -- Economic aspects -- South Africa , South Africa -- Economic conditions , Stock market development , Economic growth , South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11655 , http://hdl.handle.net/10353/d1006983 , Stock exchanges -- South Africa , Economic development -- South Africa , Stocks -- Economic aspects -- South Africa , South Africa -- Economic conditions , Stock market development , Economic growth , South Africa
- Description: The main objective of this study is to examine the long run relationship between stock market development and economic growth in the case of South Africa. The study used quarterly data covering the period from 1990Q1 to 2010Q4. To empirically test the link between the two variables, the study used the Johnson’s cointegration approach and Granger causality so as to test the direction of the relationship. The Vector Error Correction Model was also employed to capture both short run and long run dynamics. Generally, the results reveal that a long run relationship exists between the two variables and the causality flows from economic growth to stock market development. Also, the extent to which of stock market development impacts on growth is statistically weak.
- Full Text:
- Date Issued: 2013
Trade liberalisation and poverty alleviation in South Africa
- Authors: Gundu, Tafadzwa Amanda
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11480 , http://hdl.handle.net/10353/d1015283
- Description: The study attempts to address, from amongst the key issues in the current debate on economic development: the effect of trade liberalization on poverty. The relationship between trade liberalization and poverty levels is investigated in both the long run and the short run for South Africa. To measure trade liberalization, trade openness is used as the standard index. Foreign Direct Investment (FDI) measures financial openness while taxation is a measure of public intervention in the country. Consumption per capita is a proxy for poverty and Real Gross Domestic Product (RGDP) controlled for economic growth. Applying the Johansen Co-integration Techniques and Error Correction Method, empirical results suggest that trade liberalization has a cumulative effect on poverty reduction in the long-run. Lower poverty level is associated with low taxation and high foreign direct investment, particularly in the short run, in South Africa. Therefore, it is recommended that the government needs to design and pursue active development strategies to benefit from openness. There is also a need to enhance the tax revenues of the state through better collection of revenues, and administrative reforms rather than expenditure cut backs, which can reduce the effectiveness of the public sector. The government needs to strengthen allocation of funds to social sectors so as to bring the issue of poverty reduction to the central stage of economic policy making.
- Full Text:
- Date Issued: 2013
- Authors: Gundu, Tafadzwa Amanda
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11480 , http://hdl.handle.net/10353/d1015283
- Description: The study attempts to address, from amongst the key issues in the current debate on economic development: the effect of trade liberalization on poverty. The relationship between trade liberalization and poverty levels is investigated in both the long run and the short run for South Africa. To measure trade liberalization, trade openness is used as the standard index. Foreign Direct Investment (FDI) measures financial openness while taxation is a measure of public intervention in the country. Consumption per capita is a proxy for poverty and Real Gross Domestic Product (RGDP) controlled for economic growth. Applying the Johansen Co-integration Techniques and Error Correction Method, empirical results suggest that trade liberalization has a cumulative effect on poverty reduction in the long-run. Lower poverty level is associated with low taxation and high foreign direct investment, particularly in the short run, in South Africa. Therefore, it is recommended that the government needs to design and pursue active development strategies to benefit from openness. There is also a need to enhance the tax revenues of the state through better collection of revenues, and administrative reforms rather than expenditure cut backs, which can reduce the effectiveness of the public sector. The government needs to strengthen allocation of funds to social sectors so as to bring the issue of poverty reduction to the central stage of economic policy making.
- Full Text:
- Date Issued: 2013
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