scholarly journals An Investigation of the Dynamic Effect of Foreign Direct Investment (FDI) and Interest Rates on GDP in South Africa

2018 ◽  
Vol 10 (5(J)) ◽  
pp. 29-37
Author(s):  
Thomas Habanabakize ◽  
Daniel F Meyer
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Direct Investment ◽  
South African ◽  
Significant Relationship ◽  
Direct Investment ◽  
Positive Relationship ◽  
Positive Impact ◽  
Long Run ◽  
Repo Rate

Economic growth in South Africa has been in the “doldrums” for the past decade. If well managed, foreign direct investment (FDI) and repo rate (interest rate) could have a positive impact and assist in rapid economic growth so urgently needed in South Africa. FDI has been a driving force for growth in many developing economies. Not enough has been done to attract FDI in South Africa. The country has enormous ability and capacity to attract FDI inflows and to have the advantages from it. A quantitative research approach was used to analyse the association amongst the variables which include FDI, GDP and repo rate in the South African economy. The South African Reserve Bank database was used and the period analysed is from 2000 to 2016. Statistical and econometric methods such as correlation analysis, unit root tests, ARDL Bounds test for cointegration, an error correction model (ECM), and the Granger causality tests were used. Subsequently, after the econometric model was estimated, findings indicated the existence of a long-run relationship between the three variables. While, a significant positive relationship exists between FDI and GDP, a negative long-run relationship was found between GDP and repo rate and interestingly a nonsignificant relationship between repo rate and FDI. In the short run, the positive effect of FDI on GDP is minimal whilst a significant and positive relationship exists between GDP and repo rate. The results did also show some limitations in the results, with regards to FDI and repo rate that there is no significant relationship between the variables, meaning that repo rate does not have an impact on FDIs. Although some long-run evidence was found of FDI playing a role in economic growth in South Africa, such impact is limited. Also very interesting is that the repo rate and FDI do not have a statistically significant relationship. This could be due to the rising risks associated with investments in the country. In conclusion, there are many variables which could have a positive impact on the attraction of FDIs and such factors will be explored further in future studies. 

scholarly journals ANALISIS PENGARUH REMITANSI, INVESTASI ASING LANGSUNG, IMPOR DAN PERTUMBUHAN EKONOMI DI INDONESIA

2020 ◽  
Vol 2 (4) ◽  
Author(s):  
Regina Septriani Putri ◽  
Ariusni Ariusni
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Positive Impact ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
Positive Effect

Abstract : This study examined and analysis the effect of remittances, foreigndirect investment, imports, and economic growth in Indonesia in the long run andshort run. This study using Error Correction Model (ECM) method and using theannual time series data from 1989 to 2018. This study found that: (1) remittancehave an insignificant positive effect on economic growth in the long run and shortrun,(2)foreign direct investment have a significant positive impact on economicgrowth in the long run and short run, (3) import have an insignificant positiveimpact on economic growth both in the long run and short run. To increase theeconomic growth in the future, this study suggests the government to decresingimports of consume goods and increasing the inflow of capital goods, rawmaterial goods, remittances and foreign direct investment.Keyword : Remittance, Foreign Direct Investment, Import, Economic Growth andECM

scholarly journals Relationship Economic Growth with Foreign Direct Investment

2020 ◽  
Vol 3 (3) ◽  
pp. 49-68
Author(s):  
Prince Charles Heston Runtunuwu
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Direct Investment ◽  
Positive Impact ◽  
Secondary Data ◽  
Causality Test ◽  
Long Run ◽  
Causality Relationship ◽  
The One

This study aims to determine the one-way causality relationship between foreign investment and economic growth, a one-way causality relationship between economic growth and foreign investment, and a two-way causality relationship between foreign investment and economic growth in Indonesia. This was conducted in Indonesia, the data are secondary data taken using the method time series from 1971 to 2018 from the official websites, the Investment Coordinating Board, and literature sources, Foreign Investment and Gross Domestic Product. (1) in the long run the Economic Growth variable has a significant effect on Foreign Direct Investment, and vice versa; and (2) the Foreign Direct Investment variable has a significant effect on Economic Growth; (3) in the short term, the Economic Growth variable has an influence on Foreign Direct Investment, and vice versa; and the Foreign Direct Investment variable has an influence on Economic Growth. It is possible to have a better long-term relationship, bringing positive impact on economic growth in Indonesia when investment in Indonesia increases. Conversely, when economic growth decreases, it means that foreign investment is also low. Granger Causality test, shows a two-way causality relationship between Economic Growth and Foreign Direct Investment and vice versa. It is necessary to maintain growth to attract foreign direct investment, as well as foreign investment. Investment climate needs to be improved enabling to invest in Indonesia.

scholarly journals The impact of economic growth on unemployment in South Africa: 1994 – 2012

2015 ◽  
Vol 12 (4) ◽  
pp. 699-707
Author(s):  
Handson Banda ◽  
Ireen Choga
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Time Series Data ◽  
Positive Impact ◽  
Labour Productivity ◽  
Real Effective Exchange Rate ◽  
Series Data ◽  
Long Run ◽  
The Impact

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.

scholarly journals INFLUENCE OF FINANCIAL INSTABILITY AND ECONOMIC GROWTH IN FOREIGN DIRECT INVESTMENT IN SOUTH AFRICA

2021 ◽  
pp. 25-31
Author(s):  
Badamasi Sani Mohammed ◽  
Sadun Naser Yassin Alheety ◽  
Zakarya Mohsen Al-Hodiany
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Financial Instability ◽  
Positive Contribution ◽  
Long Run ◽  
Prime Objective ◽  
The Impact ◽  
Bound Test

The prime objective of this paper is to study the impact of financial instability (FI) and economic growth (RGDPP) on foreign direct investment (FDI) in South Africa from 1970 to 2016 using Autoregressive Distributive Lag (ARDL) approach. Evidence from bound test reveals that FI, RGDPP, and FDI are cointegrated in the long run. Moreover, the result shows that financial instability and economic growth are positively significant and negatively insignificant influencing the foreign direct investment respectively. The study suggests that government should necessarily develop financial system to let economic growth make a positive contribution to foreign direct investment. KEYWORDS: financial Instability (FI); Economic growth (RGDPP); foreign direct Investment (FDI); Autoregressive Distributive Lag (ARDL)

scholarly journals The Significance of Mining Infrastructural Development on South African Economy from 1980-2013: An Econometric Approach

2017 ◽  
Vol 9 (3(J)) ◽  
pp. 73-81
Author(s):  
Ofentse William Marutle ◽  
Olebogeng David Daw
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Significant Relationship ◽  
Mining Industry ◽  
Long Run ◽  
Reserve Bank ◽  
Augmented Dickey Fuller ◽  
Johansen Cointegration Test ◽  
Econometric Approach

In this present paper we investigate the relationship between mining infrastructure and economic growth in South Africa from 1980-2013. The importance of this paper is to examine if there is both short and long run significant relationship between mining infrastructure and economic growth in South Africa. The data mining was collected from South African Reserve Bank (SARB) covering the range from 1980-2013 of the paper. Both Augmented Dickey Fuller (ADF) and Phillip Perron (PP) where used for stationarity tests. Johansen Cointegration test is employed in this paper; also Vector Error Correction Model (VECM) is also employed in this paper. In the results we obtained that there is a positive significant relationship between mining infrastructure and economic growth. There is also a causal relationship between mining infrastructure and economic growth, meaning the development of mining infrastructure does promote economic growth. In conclusion the policy makers should improve private infrastructure which will equip human capital to be more useful in contributing towards knowledge and innovation. This means South African government and mining industry should priorities the development of infrastructure as component that will be sufficient towards economic development.

scholarly journals Elections, Foreign Direct Investment, and Economic Growth in Ghana’s Fourth Republic: 1993 to 2016

2019 ◽  
pp. 1-8
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Positive Impact ◽  
Series Data ◽  
Long Run ◽  
Negative Effect ◽  
Short Run ◽  
The Impact

Foreign Direct Investment (FDI) has been seen as an important factor influencing economic growth directly and indirectly in both developed and developing countries. This study assesses the impact of FDI on growth in Ghana since the return to constitutional rule in 1993. The study uses time series data from 1993 to 2016. Using the Autoregressive Distributed Lagged model (ARDL), the study finds a positive impact of FDI on growth both in the short-run and long-run. However, there is a lag period of two. The study equally finds that Gross Saving has a positive impact on growth. On the other hand inflation has a negative effect on growth both in the short and long run. The study also discovered that FDI granger causes growth but GDP does not granger cause FDI. Post-election years with incidence of political uncertainty slow down FDI inflow into Ghana. The study recommends the adoption of stringent fiscal and monetary policies to keep inflation low. It also recommends maintaining and improving the liberal market environment to attract investors, policies to encourage saving, and improving on political transitions to avoid uncertainties for investors.

scholarly journals Relationship between Real Exchange Rate and Economic Growth: the case of South Africa

2018 ◽  
Vol 10 (1) ◽  
pp. 146
Author(s):  
Deeviya Patel ◽  
Gisele Mah
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Granger Causality ◽  
Money Supply ◽  
Significant Relationship ◽  
Direct Investment ◽  
Variance Decomposition

The objective of this study was to investigate the relationship between real exchange rate and economic growth in South Africa. Using time series data, the period from 1980 to 2015 was covered in the study. Data was collected from the South African Reserve Bank, the International Monetary Fund and International Financial Statistics. The Johansen cointegration and the Vector Error Correction Model estimation techniques were employed in the study, followed by VEC Granger causality test, variance decomposition and impulse response function. The long-run results revealed a negative and significant relationship between real exchange rate with export and economic growth. On the other hand, money supply and foreign direct investment have a positive and significant relationship with real exchange rate. Only export was significant and positively related to real exchange rate in the short-run.  Results of granger causality showed that only export granger causes real exchange rate thus, a unidirectional causality exists between export and real exchange rate. Results of variance decomposition revealed that the real exchange rate is highly affected by shocks from economic growth. The impulse response functions showed that real exchange rate responds positively to shocks from real exchange rate and money supply. On the contrary, real exchange rate responds negatively to a shock from economic growth. There is, therefore, a need to increase exports, money supply, foreign direct investment and economic growth as these would lead to an increase in the Rand and consequently, appreciation of the Rand.  

Foreign direct investment and economic growth in South America

2019 ◽  
Vol 46 (2) ◽  
pp. 383-398 ◽  
Author(s):  
Victor Owusu-Nantwi ◽  
Christopher Erickson
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
South America ◽  
Growth And Development ◽  
Direct Investment ◽  
Positive Impact ◽  
Cointegration Test ◽  
Content Type ◽  
Long Run ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of foreign direct investment (FDI) on economic growth in countries in South America. Additionally, the study explores the causal linkage between FDI and growth in the region. Design/methodology/approach The study employs Pedroni’s cointegration test to examine the long-run relationship between FDI and economic growth in South America. Further, the study employs the vector error correction model (VECM) to examine the long-run relationship, and the causal nexus between FDI and economic growth in South America for the period 1980–2015. Findings The Pedroni cointegration test establishes a long-run relationship between FDI and economic growth in a panel of ten countries in South America. The long-run estimates of the study find a significant positive impact of FDI on economic growth in the region. The VECM results find a short-run bidirectional causality between FDI and economic growth. The error-term is negative and significant. This indicates the presence of long-run equilibrium relationship among the variables. Practical implications Countries in South America should adopt policies that would substantially enlarge FDI inflows to enhance their growth and development. Originality/value Numerous studies have examined the impact of FDI on economic growth in the context of Latin America. This study fills a gap in the existing literature by providing an empirical evidence that focuses on South America. This additional perspective could form the basis for the evaluation of the investment policies, and help policymakers to pursue FDI policies that would enhance growth and development in South America.

Foreign Direct Investment, Exports and Long-term Economic Growth in Alabama: A Co-integration Analysis

2020 ◽  
pp. 097674792090626
Author(s):  
Sergio Castello ◽  
Anindya Biswas
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Gross Domestic Product ◽  
Direct Investment ◽  
Positive Relationship ◽  
Growth Path ◽  
Significant Evidence ◽  
Long Run ◽  
Integration Analysis

This article provides a state-specific co-integration study by linking exports and foreign direct investment (FDI) to economic growth in Alabama. The study aims to determine how much of Alabama’s economic growth is driven by exports. Mercedes-Benz and its announcement of a US$600 million investment in 1993 started a surge of FDI and exports never seen before in the state accelerating its long-run economic growth path. Twenty years later, Mercedes-Benz has invested over US$4.5 billion and can produce 300,000 vehicles per year. This study analyses the importance of exports and FDI in the Alabama economy and establishes significant evidence of the positive relationship between Total Gross Domestic Product for Alabama (ALNGSP) and its exports from 1999 to 2017, whereas it does not find a statistically significant impact of the FDI on Alabama’s growth. We conclude that Alabama needs to focus on three main policies to continue its economic success. First, it needs to continue to attract FDI in these sectors to build a vast supplier network. Second, Alabama must allocate new investments in infrastructure and finally, it needs to continue to be a friendly state to businesses, providing skilled labour, low corporate taxes and less bureaucracy. JEL: C82, L62, O51

scholarly journals Relationship between Real Exchange Rate and Economic Growth: the case of South Africa

2018 ◽  
Vol 10 (1(J)) ◽  
pp. 146-158
Author(s):  
Deeviya Patel ◽  
Gisele Mah
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Granger Causality ◽  
Money Supply ◽  
Significant Relationship ◽  
Direct Investment ◽  
Variance Decomposition

The objective of this study was to investigate the relationship between real exchange rate and economic growth in South Africa. Using time series data, the period from 1980 to 2015 was covered in the study. Data was collected from the South African Reserve Bank, the International Monetary Fund and International Financial Statistics. The Johansen cointegration and the Vector Error Correction Model estimation techniques were employed in the study, followed by VEC Granger causality test, variance decomposition and impulse response function. The long-run results revealed a negative and significant relationship between real exchange rate with export and economic growth. On the other hand, money supply and foreign direct investment have a positive and significant relationship with real exchange rate. Only export was significant and positively related to real exchange rate in the short-run.  Results of granger causality showed that only export granger causes real exchange rate thus, a unidirectional causality exists between export and real exchange rate. Results of variance decomposition revealed that the real exchange rate is highly affected by shocks from economic growth. The impulse response functions showed that real exchange rate responds positively to shocks from real exchange rate and money supply. On the contrary, real exchange rate responds negatively to a shock from economic growth. There is, therefore, a need to increase exports, money supply, foreign direct investment and economic growth as these would lead to an increase in the Rand and consequently, appreciation of the Rand.  

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