n South African Journal of Economic and Management Sciences - Considering barriers to investment in South Africa : economic
|Article Title||Considering barriers to investment in South Africa : economic|
|© Publisher:||University of Pretoria|
|Journal||South African Journal of Economic and Management Sciences|
|Publication Date||Jun 2005|
|Pages||225 - 237|
|Keyword(s)||G14, G15 and O16|
ISI Social Science
This paper examines the effect of South Africa's economic fundamentals on net direct investment and net portfolio investment. The results suggest that the main determinants of investment in South Africa are resource prices, input productivity and the economic performance of the domestic economy. The results illustrate that net direct investment and net portfolio investment are close but not perfect substitutes. In addition, we find that an increase in labour input costs reduces both net direct investment and net portfolio investment. Further, an increase in fixed capital productivity increases net direct investment. Further, also the results illustrate that subsidies increase both net direct investment and net portfolio investment. Moreover, an increase in exports increases both net direct investment and net portfolio investment. Policy recommendations are thus proposed that may increase foreign direct investment in South Africa.
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