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Corresponding Author:
Siyasanga Dingela, Nelson Mandela University

Coauthors:
Ronney Ncwadi, Department of Economics, Faculty of Business and Economic Studies, Nelson Mandela University, Port Elizabeth, South Africa

A Behaviour of South Africa’s Economy towards Inflows of Foreign Direct Investment (FDI) from Brazil, Russia, India and China (Brics) Economies

Volume 75 - Issue 2, May 2022
(pp. 189-212)
JEL classification: C10, C33, E20, E24, F30, G28
Keywords: South African Economic Growth, BRIC FDI Flows, Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS), Granger Causality Tests (i.e., Stacked and Dumistrescu Hurlin Tests)

Abstract

This study investigated the behaviour of South Africa’s economy towards inflows of foreign direct investment (FDI) from Brazil, Russia, India and China (BRICs) economies, during the period 1997 to 2016. The study employed two cointegration methods to investigate the behaviour of South Africa’s economy towards inflows of foreign direct investment from BRICs economies. These are fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS). For granger causality, the study employed Stacked and Dumistrescu Hurlin tests. All the models used time series annual data from 1997 to 2016. The empirical results show that there is cointegration between BRICs FDI flows and South African economic growth. Also, there is Granger causality between the variables. The study results suggest that the policy makers should focus the attention on lobbying foreign direct investment from BRICs economies, since this study shows positive impact and relationship between South Africa’s economic growth and BRICs FDI inflows. The BRICs economies should focus on enhancing investment partnership, preventing protectionism, and promoting intra-BRICS flows. In addition, South Africa should eliminate barriers affecting business with BRICs countries. Policy makers should promote the building of new companies (for example Greenfield Investment) so that the economy of South Africa could grow and create employment.

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A Behaviour of South Africa’s Economy towards Inflows of Foreign Direct Investment (FDI) from Brazil, Russia, India and China (Brics) Economies

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Institute for International Economics of the Genoa Chamber of Commerce

Institute for International Economics
of the Genoa Chamber of Commerce