THE EFFECTS OF PUBLIC DEBT ON FOREIGN DIRECT INVESTMENT IN SOUTH AFRICA (1983-2013): AN EMPIRICAL ANALYSIS

Risk Governance & Control: Financial Markets & Institutions

关键词: Foreign Direct Investment;    Public Debt;    Vector Error Correction Model;    Variance Decomposition;    Impulse Response;   

DOI  :  10.22495/rgcv6i4siart2

学科分类：社会科学、人文和艺术（综合）

来源: Virtus Interpress

【 摘 要 】

The political move in South Africa occurred against a setting of high government deficits. Efforts have been made over the years by the government to reduce fiscal deficit and inflation, liberalize the capital account and the financial system as well as reduce tariffs. The main objective of this study, therefore, is to empirically investigate the effect of public debt on foreign direct investment in South African for the period 1983 – 2013. The study employs a Vector Error Correction Model, which provides both the long run and short run relationships among the variables. The long run results indicate that the relationship between public debt and foreign direct investment, as well as interest rate and foreign direct investment, is positive and statistically significant, while there is an insignificant negative relationship between exchange rate and foreign direct investment. Based on the long run results, the study, thus, recommend that the level of public debt and interest rate should increase so that the level of foreign direct investment can increase in the country. However, the policy of depreciation of rand is considered inappropriate for the economy if the desire is to increase the level of foreign direct investment in the country.

【 授权许可】

CC BY-NC