To What Extent Do Capital Inflows Impact the Response of the South African Economic Growth to Positive SA-US Interest Rate Differential Shocks?

2019 ◽  
pp. 149-159
Author(s):  
Nombulelo Gumata ◽  
Eliphas Ndou
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
South African ◽  
Capital Inflows ◽  
The South

scholarly journals The Contribution of Foreign Direct Investment (FDI) To Domestic Employment Levels in South Africa: A Vector Autoregressive Approach

2019 ◽  
Vol 11 (1(J)) ◽  
pp. 110-121
Author(s):  
Bongumusa Prince Makhoba, ◽  
Irrshad Kaseeram
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Least Squares ◽  
South African ◽  
Empirical Analysis ◽  
Negative Relationship ◽  
Ordinary Least Squares ◽  
Series Data ◽  
The South ◽  
Vector Autoregressive

Several empirical works have yielded mixed and controversial results with regard to the effects of FDI on employment and economic growth. The primary focus of this study is to investigate the contribution of FDI to domestic employment levels in the context of the South African economy. The analyses of the study were carried out using the annual time series data from 1980 to 2015. The macroeconomic variables employed in the empirical investigation include employment, FDI, GDP, inflation, trade openness and unit labour costs. The study used secondary data from the South African Reserve Bank and Statistics South Africa database. The study estimated a Vector Autoregressive/ Vector Error Correction Mechanism (VAR/VECM) approach to conduct empirical analysis. However, the study also employed single equation estimation techniques, including the Ordinary Least Squares (OLS), Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS) and Canonical Cointegrating Regression (CCR) models as supporting tools to verify the VAR/VECM results. This study provides strong evidence of a significant negative relationship between FDI and employment levels in the South African economy. Empirical analysis of the study suggests that the effect of economic growth on employment is highly positive and significant in South Africa’s economy. The study recommends that policymakers ought to invest more in productive sectors that aim to promote economic growth and development to boost employment opportunities in South Africa.

South African Economy: No Easy Life Ahead

2015 ◽  
pp. 104-116
Author(s):  
P. Mozias
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Interest Rates ◽  
South African ◽  
Trade Unions ◽  
Current Account Deficit ◽  
National Development ◽  
Capital Inflows ◽  
The Other ◽  
The One

South African rand depreciated in 2013–2014 under the influence of a number of factors. Internationally, its weakness was associated with the capital outflow from all emerging markets as a result of QE’s tapering in the US. Domestically, rand plummeted because of the deterioration of the macroeconomic stance of South Africa itself: economic growth stalled and current account deficit widened again. Consumer spending was restrained with the high household indebtedness, investment climate worsened with the wave of bloody strikes, and net export was still prone to J-curve effect despite the degree of the devaluation happened. But, in its turn, those problems are a mere reflection of the deep institutional misbalances inherent to the very model of the national economy. Saving rate is too low in South Africa. This leads not only to an insufficient investment, but also to trade deficits and overdependence on speculative capital inflows. Extremely high unemployment means that the country’s economic potential is substantially underutilized. Joblessness is generated, first and foremost, by the dualistic structure of the national entrepreneurship. Basic wages are being formed by way of a bargaining between big public and semi state companies, on the one hand, and trade unions associated with the ruling party, on the other. Such a system is biased towards protection of vested interests of those who earn money in capital-intensive industries. At the same time, these rates of wages are prohibitively high for a small business; so far private companies tend to avoid job creation. A new impulse to economic development is likely to emerge only through the government’s efforts to mitigate disproportions and to pursue an active industrial policy. National Development Plan adopted in 2012 is a practical step in that direction. But the growth of public investment is constrained by a necessity of fiscal austerity; as a result, the budget deficit remained too large in recent years. South African Reserve Bank will have to choose between a stimulation of economic growth with low interest rates, on the one hand, and a support of rand by tightening of monetary policy, on the other. This dilemma will greatly influence prices of securities and yields at South African financial markets.

Does the South African Reserve Bank follow a nonlinear interest rate reaction function?

2013 ◽  
Vol 35 ◽  
pp. 272-282 ◽  
Author(s):  
Yosra Baaziz ◽  
Moez Labidi ◽  
Amine Lahiani
Keyword(s):  
Interest Rate ◽  
South African ◽  
Reaction Function ◽  
The South ◽  
Reserve Bank

South Africa’s Foreign Policy and the BRICS Formation: Reflections on the Quest for the ‘Right’ Economic-diplomatic Strategy

2017 ◽  
Vol 9 (1) ◽  
pp. 39-61
Author(s):  
Theo Neethling
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Policy ◽  
South African ◽  
Special Importance ◽  
South African Government ◽  
The South ◽  
African Government ◽  
Economic Diplomacy ◽  
The Right

South Africa’s foreign policy has recently been gravitating away from an appeal to Western powers towards the establishment of new friendships in the Global South, especially with Asia and Latin America. Moreover, the favouring of the Brazil, Russia, India, China and South Africa (BRICS) partnership and a rising tone of anti-Western sentiments have increasingly been evidenced in South Africa’s contemporary foreign policy, which are of major significance to the nature and direction of its economic-diplomatic strategy. Three broad perspectives or main arguments from this article are of special importance: First, most members of BRICS are troubled by slower economic growth, which should be of concern to South Africa’s current foreign policy stand. Second, anti-Western ideological concerns and related presumptions on the part of the South African government that the BRICS formation could potentially assume a counter-hegemonic character vis-à-vis the West are questionable and dubious. Third, South Africa stands to benefit from many networks and opportunities provided by BRICS membership. At the same time, because of its low economic growth, high levels of poverty and lack of employment opportunities, South Africa cannot afford to follow an approach of narrow interest concerning the BRICS formation and to constrain itself in its economic diplomacy. This article argues that the South African government will therefore have to consider the opportunities offered by a more nuanced and pragmatic foreign policy designed on multiple identities.

scholarly journals Reforming the health sector in South Africa – Post 1994

2015 ◽  
Vol 5 (3) ◽  
pp. 167-179
Author(s):  
Melody Brauns ◽  
Anne Stanton
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Health Sector ◽  
South African Government ◽  
The South ◽  
African Government

This article reviews the efforts of the South African government in recognising development challenges of the post-apartheid era and assesses the approaches employed to bring about economic growth and to address inherited inequalities.

scholarly journals Incentives for the manufacturing sector: what South Africa can learn from Malaysia and Singapore

2015 ◽  
Vol 8 (1) ◽  
pp. 105-124
Author(s):  
Lenatha Wentzel ◽  
Kerry De Hart
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Foreign Investment ◽  
Manufacturing Sector ◽  
South African Government ◽  
Manufacturing Companies ◽  
The South ◽  
African Government ◽  
Similarities And Differences

The expansion of the manufacturing sector is one of the South African government’s focus areas for economic growth and employment creation. The research on which this article is based identified additional incentives, applicable to the manufacturing sector, which the South African government could introduce to encourage investors to choose the South African manufacturing sector as a desired investment destination. The incentives provided to manufacturing companies by the governments of Malaysia and Singapore and those provided by the South African government are compared in order to examine the similarities and differences between these incentives. In the light of these findings, recommendations are made for additional incentives in South Africa to promote investment in South African manufacturing companies and reduce some of the barriers that prevent local and foreign investment in the country.

scholarly journals A modelling process of short-term interest rate risk management for the South African commercial banking sector

2011 ◽  
Vol 9 (1) ◽  
pp. 628-637
Author(s):  
Jiaqi Sun ◽  
J.H. Van Rooyen
Keyword(s):  
Interest Rate ◽  
South African ◽  
Inflation Targeting ◽  
Banking Sector ◽  
Empirical Finding ◽  
Interest Rate Risk ◽  
Commercial Banking ◽  
The South ◽  
Short Term ◽  
Rate Risk

This study focuses on banking book interest rate risk (IRR) management, more specifically short-term IRR management (SIRR). This type of risk is partly induced by the inflation targeting policy of the South African Reserve Bank (SARB). As a result, inflation leads to an uncertain interest rate cycle and a period of uncertain interest rate levels as it relates to lending and borrowing activities in the South African commercial banking sector. This study highlights what causes short-term interest rate risk and how the banks may forecast and manage the SIRR with reference to the inflation targeting policy. The banking industry manages a high volume of fund transactions and portfolios of investments. The banks are intricately involved in the financial markets and are therefore exposed to a large number of risk factors. A sound banking system is an important prerequisite for a country’s future economic development. One key empirical finding of this research is that 50 per cent of the South African banks agree that loans that cannot undergo immediate rate adjustments are exposed to the repo-rate adjustment after the Monetary Policy Committee (MPC) meeting. Banks surveyed see the need for the development of a short-term interest rate risk (SIRR) management process to better control such repo-rate risk. The next key empirical finding is that interest rate risk is still managed via traditional repricing gap and sensitivity analysis which is not ideal for risk management due to inherent weaknesses (such as not quantifying capital risk exposure). This agrees with the Pricewaterhousecoopers Balance Sheet Management benchmark survey

Sign in / Sign up

Export Citation Format

Share Document