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:
- Date Issued: 2023-06
- 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:
- Date Issued: 2023-06
Determinants of foreign direct investments in the motor industry in South Africa
- Authors: Onceya, Siyabulela
- Date: 2011
- Subjects: Investments, Foreign -- South Africa , Automobile industry and trade -- South Africa , Motor industry -- South Africa , Industrial policy -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11459 , http://hdl.handle.net/10353/545 , Investments, Foreign -- South Africa , Automobile industry and trade -- South Africa , Motor industry -- South Africa , Industrial policy -- South Africa
- Description: The recent surge in foreign capital inflows into developing countries has generated interest among researchers wanting to analyse the major determinants of Foreign Direct Investments in the motor industry (FDIsm). This dissertation investigates the determinants of FDI in the motor industry in South Africa. The underpinning theoretical literature in this study is the Micro-level theory of FDI and the Eclectic theory as well as empirical literature from several authors. The study used quarterly time series data, which covers the period 1994q1- 2008q4. FDIs are modeled as the function of economic growth, interest rates, exchange rate, education and the openness of the country. The variables in the model are tested for stationarity. Cointegration analysis was also used to test for long run relationships between the variables. The trace and the maximum eigenvalue tests suggest that there are at least two cointegration relationships, an error correction modelling technique is used to establish the determinants of foreign direct investment. The error correction model was estimated which provided both long run and short run parameter estimates. The results show that economic growth, education and the openness of the country are positively related to foreign direct investment in the motor industry. Interest rates and exchange rates negatively affect foreign direct investment in the motor industry in South Africa. The results of this study are also supported by the impulse response and variance decomposition tests. The policy recommendation that emanate from this study is that efforts should be made to boost the level of economic growth in order to enhance and attract more foreign investors. It is therefore important for the government to purse policies that will encourage economic growth.
- Full Text:
- Date Issued: 2011
- Authors: Onceya, Siyabulela
- Date: 2011
- Subjects: Investments, Foreign -- South Africa , Automobile industry and trade -- South Africa , Motor industry -- South Africa , Industrial policy -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11459 , http://hdl.handle.net/10353/545 , Investments, Foreign -- South Africa , Automobile industry and trade -- South Africa , Motor industry -- South Africa , Industrial policy -- South Africa
- Description: The recent surge in foreign capital inflows into developing countries has generated interest among researchers wanting to analyse the major determinants of Foreign Direct Investments in the motor industry (FDIsm). This dissertation investigates the determinants of FDI in the motor industry in South Africa. The underpinning theoretical literature in this study is the Micro-level theory of FDI and the Eclectic theory as well as empirical literature from several authors. The study used quarterly time series data, which covers the period 1994q1- 2008q4. FDIs are modeled as the function of economic growth, interest rates, exchange rate, education and the openness of the country. The variables in the model are tested for stationarity. Cointegration analysis was also used to test for long run relationships between the variables. The trace and the maximum eigenvalue tests suggest that there are at least two cointegration relationships, an error correction modelling technique is used to establish the determinants of foreign direct investment. The error correction model was estimated which provided both long run and short run parameter estimates. The results show that economic growth, education and the openness of the country are positively related to foreign direct investment in the motor industry. Interest rates and exchange rates negatively affect foreign direct investment in the motor industry in South Africa. The results of this study are also supported by the impulse response and variance decomposition tests. The policy recommendation that emanate from this study is that efforts should be made to boost the level of economic growth in order to enhance and attract more foreign investors. It is therefore important for the government to purse policies that will encourage economic growth.
- Full Text:
- Date Issued: 2011
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