Foreign direct investment flows and fiscal discipline in South Africa

Schoeman, N.J.; Robinson, Zurika; Wet, Theuns J. De

doi:10.4102/sajems.v3i2.2609

“…Areas hypothesis +/-+/-/0 Edwards (1990), Blonigen and Feenstra (1996), Tuman and Emmert (1999) Tax Other -+/-/0 Swenson (1994), Billington (1999), Porcano and Price (1996), Wei (2000), Schoeman et al (2000), Hines (1996) Moore (1993), Tcha (1998), Yang et al (2000), Leahy and Montagna (2000b), Zhao (1995Zhao ( , 1998 Cost of capital…”

Section: Currencymentioning

confidence: 99%

The determinants of foreign direct investment: An extreme bounds analysis

Moosa

¹

,

Cardak

²

2006

Journal of Multinational Financial Management

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Eight determining variables of FDI inflows are examined by applying extreme bounds analysis to a cross-sectional sample encompassing data on 140 countries. With GDP per capita serving as the free variable, seven variables are tried as the variables of interest in combination with three other variables. The results reveal that only two variables are robust: exports as a percentage of GDP and telephone lines per 1000 of the population. It is shown that a parsimonious model with a reasonably good predictive power contains the free variable, the two robust variables and two dummies.

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“…The papers areMorisset (2000),Schoeman et al (2000),Asiedu (2002),Bende-Nabende (2002), andLemi and Asefa (2003).…”

mentioning

confidence: 99%

Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability

Asiedu

¹

2005

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Data from several investor surveys suggest that macroeconomic instability, investment restrictions, corruption and political instability have a negative impact on foreign direct investment (FDI) to Africa. However, the relationship between FDI and these country characteristics has not been studied. This paper uses panel data for 22 countries over the period 1984-2000 to examine the impact of natural resources, market size, government policies, political instability and the quality of the host country's institutions on FDI. It also analyses the importance of natural resources and market size vis-à-vis government policy and the host country's institutions in directing FDI flows. The main result is that natural resources and large markets promote FDI. However, lower inflation, good infrastructure, an educated population, openness to FDI, less corruption, political stability and a reliable legal system have a similar effect. A benchmark specification …/. Keywords: Africa, corruption, foreign direct investment, institutions, natural resources, political instability JEL classification: F23, O55 shows that a decline in the corruption from the level of Nigeria to that of South Africa has the same positive effect on FDI as increasing the share of fuels and minerals in total exports by about 35 per cent. These results suggest that countries that are small or lack natural resources can attract FDI by improving their institutions and policy environment.

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“…The papers areLemi and Asefa (2003); Bende-Nabende (2002);Asiedu (2002);Morisset (2000) andSchoeman, Robinson and de Wet (2000).…”

mentioning

confidence: 99%

Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability

Asiedu

¹

2006

View full text Add to dashboard Cite

Data from several investor surveys suggest that macroeconomic instability, investment restrictions, corruption and political instability have a negative impact on foreign direct investment (FDI) to Africa. However, the relationship between FDI and these country characteristics has not been studied. This paper uses panel data for 22 countries over the period 1984-2000 to examine the impact of natural resources, market size, government policies, political instability and the quality of the host country's institutions on FDI. It also analyses the importance of natural resources and market size vis-à-vis government policy and the host country's institutions in directing FDI flows. The main result is that natural resources and large markets promote FDI. However, lower inflation, good infrastructure, an educated population, openness to FDI, less corruption, political stability and a reliable legal system have a similar effect. A benchmark specification …/. Keywords: Africa, corruption, foreign direct investment, institutions, natural resources, political instability JEL classification: F23, O55 shows that a decline in the corruption from the level of Nigeria to that of South Africa has the same positive effect on FDI as increasing the share of fuels and minerals in total exports by about 35 per cent. These results suggest that countries that are small or lack natural resources can attract FDI by improving their institutions and policy environment.

show abstract

Foreign direct investment flows and fiscal discipline in South Africa

Cited by 15 publications

References 3 publications

The determinants of foreign direct investment: An extreme bounds analysis

The determinants of foreign direct investment: An extreme bounds analysis

Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability

Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability

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