n African Finance Journal - Capital inflows and profit remittances : a causality analysis for the South African economy
|Article Title||Capital inflows and profit remittances : a causality analysis for the South African economy|
|© Publisher:||AfricaGrowth Institute|
|Journal||African Finance Journal|
|Publication Date||Jan 2009|
|Pages||1 - 24|
|Issue||Special issue 1|
|Keyword(s)||ARDL, Cointegration, Current Account deficit, F21, F32, F34, F37, F43, FDI investment, Portfolio investment, South Africa and Toda-Yamamoto Granger Causality|
The paper examines the relationship between inflows (FDI, portfolio plus other investment) to outflows (dividends, branch profits and interest) using the bounds/ARDL/bounds cointegration test and the Toda and Yamamoto (1995) Granger non-causality test. From the ARDL test, there is a long run relationship between FDI and associated outflows. We find no such relationship between portfolio, other investment, and associated outflows. Causality tests show that FDI Granger causes outflows (dividends, profits and interest). There is bidirectional causality between portfolio and other investment and outflows. The results suggest that FDI inflows do not always have positive effects for developing countries.
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