Trends and determinants of inward foreign direct investment to South Africa
- Authors: Rusike, Tatonga Gardner
- Date: 2008
- Subjects: International business enterprises -- South Africa , Investments, Foreign -- South Africa , Economic development -- South Africa , Macroeconomics -- South Africa , Foreign exchange rates -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:995 , http://hdl.handle.net/10962/d1002730 , International business enterprises -- South Africa , Investments, Foreign -- South Africa , Economic development -- South Africa , Macroeconomics -- South Africa , Foreign exchange rates -- South Africa
- Description: Foreign direct investment (FDI) is seen as a way to provide the needed capital inflow to stimulate growth in a domestic economy. FDI can also result in increased employment levels, managerial skills and increase in technology. In efforts to attract FDI, host countries have undertaken various policy incentives to attract foreign investors. This study analyses the trends and determinants of inward FDI to South Africa for the period 1975-2005. The study starts by reviewing FDI literature on its determinants and provides the macroeconomic background and FDI related policies undertaken in South Africa. The trend and sectoral analysis provides the actual nature of FDI flows to South Africa. An empirical model linking theoretical and empirical determinants of FDI is estimated using the Johansen cointegration and VECM framework. The study also augments the cointegration framework with impulse response and variance decomposition analyses to complement the long and short run determinants of FDI. Dummy variables are used in each of the estimated FDI models to take into account the possibility of structural breaks. Results show that relative to the size of the economy and to other developing countries, South Africa still receives low levels of inward FDI. Only are few years are exceptional i.e. 1997, 2001 and 2005. From the sectoral distribution, the financial sector is now the major recipient of FDI followed by the mining and manufacturing sectors. The emergence of the financial sector could suggest that FDI motives could have shifted from the natural resource seeking and market seeking to efficiency seeking FDI. The United Kingdom emerges as the major source of FDI to South Africa followed by United States of America and Germany. Empirical analysis indicated that openness, exchange rate and financial development are important long run determinants of FDI. Increased openness and financial development attract FDI while an increase (depreciation) in the exchange rate deters FDI to South Africa. Market size emerges as a short run determinant of FDI although it is declining in importance. Most of the impulse response analysis confirmed the VECM findings. Variance decomposition analysis showed that FDI itself, imports and exchange rate explain a significant amount of the forecast error variance. The influence of market size variable is small and declining over time.
- Full Text:
- Date Issued: 2008
- Authors: Rusike, Tatonga Gardner
- Date: 2008
- Subjects: International business enterprises -- South Africa , Investments, Foreign -- South Africa , Economic development -- South Africa , Macroeconomics -- South Africa , Foreign exchange rates -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:995 , http://hdl.handle.net/10962/d1002730 , International business enterprises -- South Africa , Investments, Foreign -- South Africa , Economic development -- South Africa , Macroeconomics -- South Africa , Foreign exchange rates -- South Africa
- Description: Foreign direct investment (FDI) is seen as a way to provide the needed capital inflow to stimulate growth in a domestic economy. FDI can also result in increased employment levels, managerial skills and increase in technology. In efforts to attract FDI, host countries have undertaken various policy incentives to attract foreign investors. This study analyses the trends and determinants of inward FDI to South Africa for the period 1975-2005. The study starts by reviewing FDI literature on its determinants and provides the macroeconomic background and FDI related policies undertaken in South Africa. The trend and sectoral analysis provides the actual nature of FDI flows to South Africa. An empirical model linking theoretical and empirical determinants of FDI is estimated using the Johansen cointegration and VECM framework. The study also augments the cointegration framework with impulse response and variance decomposition analyses to complement the long and short run determinants of FDI. Dummy variables are used in each of the estimated FDI models to take into account the possibility of structural breaks. Results show that relative to the size of the economy and to other developing countries, South Africa still receives low levels of inward FDI. Only are few years are exceptional i.e. 1997, 2001 and 2005. From the sectoral distribution, the financial sector is now the major recipient of FDI followed by the mining and manufacturing sectors. The emergence of the financial sector could suggest that FDI motives could have shifted from the natural resource seeking and market seeking to efficiency seeking FDI. The United Kingdom emerges as the major source of FDI to South Africa followed by United States of America and Germany. Empirical analysis indicated that openness, exchange rate and financial development are important long run determinants of FDI. Increased openness and financial development attract FDI while an increase (depreciation) in the exchange rate deters FDI to South Africa. Market size emerges as a short run determinant of FDI although it is declining in importance. Most of the impulse response analysis confirmed the VECM findings. Variance decomposition analysis showed that FDI itself, imports and exchange rate explain a significant amount of the forecast error variance. The influence of market size variable is small and declining over time.
- Full Text:
- Date Issued: 2008
The term structure of interest rates and economic activity in South Africa
- Authors: Shelile, Teboho
- Date: 2007
- Subjects: Finance -- South Africa , Monetary policy -- South Africa , Interest rates -- South Africa , Economic development -- South Africa , South Africa -- Economic conditions -- 21st century
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:994 , http://hdl.handle.net/10962/d1002729 , Finance -- South Africa , Monetary policy -- South Africa , Interest rates -- South Africa , Economic development -- South Africa , South Africa -- Economic conditions -- 21st century
- Description: Many research papers have documented the positive relationship between the slope of the yield curve and future real economic activity in different countries and different time periods. One explanation of this link is based on monetary policy. The forecasting ability of the term spread on economic growth is based on the fact that interest rates reflect the expectations of investors about the future economic situation when deciding about their plans for consumption and investment. This thesis examined the predictive ability of the term structure of interest rates on economic activity, and the effects of different monetary policy regimes on the predictive ability of the term spread. The South African experience offers a unique opportunity to examine this issue, as the country has experienced numerous monetary policy frameworks since the 1970s. The study employed the Generalised Method Moments technique, since it is considered to be more efficient than Ordinary Least Squares. Results presented in this thesis established that the term structure successfully predicted real economic activity during the entire research period with the exception of the last sub-period (2000-2004) when using the multivariate model. In the periods of financial market liberalisation and interest rates deregulation the term structure was found to be a better predictor of economic activity in South Africa. These findings emphasise the importance of considering the prevailing economic environment in testing the term structure theory.
- Full Text:
- Date Issued: 2007
- Authors: Shelile, Teboho
- Date: 2007
- Subjects: Finance -- South Africa , Monetary policy -- South Africa , Interest rates -- South Africa , Economic development -- South Africa , South Africa -- Economic conditions -- 21st century
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:994 , http://hdl.handle.net/10962/d1002729 , Finance -- South Africa , Monetary policy -- South Africa , Interest rates -- South Africa , Economic development -- South Africa , South Africa -- Economic conditions -- 21st century
- Description: Many research papers have documented the positive relationship between the slope of the yield curve and future real economic activity in different countries and different time periods. One explanation of this link is based on monetary policy. The forecasting ability of the term spread on economic growth is based on the fact that interest rates reflect the expectations of investors about the future economic situation when deciding about their plans for consumption and investment. This thesis examined the predictive ability of the term structure of interest rates on economic activity, and the effects of different monetary policy regimes on the predictive ability of the term spread. The South African experience offers a unique opportunity to examine this issue, as the country has experienced numerous monetary policy frameworks since the 1970s. The study employed the Generalised Method Moments technique, since it is considered to be more efficient than Ordinary Least Squares. Results presented in this thesis established that the term structure successfully predicted real economic activity during the entire research period with the exception of the last sub-period (2000-2004) when using the multivariate model. In the periods of financial market liberalisation and interest rates deregulation the term structure was found to be a better predictor of economic activity in South Africa. These findings emphasise the importance of considering the prevailing economic environment in testing the term structure theory.
- Full Text:
- Date Issued: 2007
Development of the South African monetary banking sector and money market
- Authors: Patel, Aadil Suleman
- Date: 2005
- Subjects: South African Reserve Bank , Banks and banking -- South Africa , Money market -- South Africa , Economic development -- South Africa , Monetary policy -- South Africa , South Africa -- Economic conditions , Financial institutions -- South Africa , Money -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:997 , http://hdl.handle.net/10962/d1002732 , South African Reserve Bank , Banks and banking -- South Africa , Money market -- South Africa , Economic development -- South Africa , Monetary policy -- South Africa , South Africa -- Economic conditions , Financial institutions -- South Africa , Money -- South Africa
- Description: This thesis presents a theoretical analysis of developments in the South African monetary banking sector and money market. In the first section, evolution of the political, social and economic environments over the past few decades are discussed to provide the reader with an idea of some factors responsible for the underdeveloped nature of this market. It has been argued that the domestic political and economic landscape is relatively stable. Nevertheless, factors such as Zimbabwe’s political and ensuing economic turmoil, coupled with numerous financial crises in other developing nations have had negative consequences on domestic financial market development and economic growth. The current state of monetary policy is also analysed, within the economic environment, and various policy considerations have been put forth concerning the inflation targeting policy. The thesis then goes on to scrutinise the statutory and institutional environments within which the monetary banking institutions operate. Recent changes in the regulations governing the operations of these institutions are identified, together with the consequences of such laws on banking institutions and possible amendments have been suggested. In particular, a system of Asset Based Reserve Requirements (ABRR) has been recommended, in place of the current cash reserve requirement, to ensure regulators create a level playing field in the financial sector. The system can also provide authorities with the necessary control required to direct funds to the most desirable sectors of the economy. Development of the interbank market and the effect of reduced banking competition on the efficacy of the South African Reserve Bank’s refinancing operations and inflation targeting policy are also considered. Finally, the thesis analyses some effects of financial development on the South African economy, and whether it is in the best interests of the country to pursue financial reforms with such vigour. While financial development may bring South Africa closer to international standards of best practice, the timing and extent of the reforms will be critical to guarantee success.
- Full Text:
- Date Issued: 2005
- Authors: Patel, Aadil Suleman
- Date: 2005
- Subjects: South African Reserve Bank , Banks and banking -- South Africa , Money market -- South Africa , Economic development -- South Africa , Monetary policy -- South Africa , South Africa -- Economic conditions , Financial institutions -- South Africa , Money -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:997 , http://hdl.handle.net/10962/d1002732 , South African Reserve Bank , Banks and banking -- South Africa , Money market -- South Africa , Economic development -- South Africa , Monetary policy -- South Africa , South Africa -- Economic conditions , Financial institutions -- South Africa , Money -- South Africa
- Description: This thesis presents a theoretical analysis of developments in the South African monetary banking sector and money market. In the first section, evolution of the political, social and economic environments over the past few decades are discussed to provide the reader with an idea of some factors responsible for the underdeveloped nature of this market. It has been argued that the domestic political and economic landscape is relatively stable. Nevertheless, factors such as Zimbabwe’s political and ensuing economic turmoil, coupled with numerous financial crises in other developing nations have had negative consequences on domestic financial market development and economic growth. The current state of monetary policy is also analysed, within the economic environment, and various policy considerations have been put forth concerning the inflation targeting policy. The thesis then goes on to scrutinise the statutory and institutional environments within which the monetary banking institutions operate. Recent changes in the regulations governing the operations of these institutions are identified, together with the consequences of such laws on banking institutions and possible amendments have been suggested. In particular, a system of Asset Based Reserve Requirements (ABRR) has been recommended, in place of the current cash reserve requirement, to ensure regulators create a level playing field in the financial sector. The system can also provide authorities with the necessary control required to direct funds to the most desirable sectors of the economy. Development of the interbank market and the effect of reduced banking competition on the efficacy of the South African Reserve Bank’s refinancing operations and inflation targeting policy are also considered. Finally, the thesis analyses some effects of financial development on the South African economy, and whether it is in the best interests of the country to pursue financial reforms with such vigour. While financial development may bring South Africa closer to international standards of best practice, the timing and extent of the reforms will be critical to guarantee success.
- Full Text:
- Date Issued: 2005
- «
- ‹
- 1
- ›
- »