oa Journal of Economic and Financial Sciences - An analysis of fixed capital formation in South Africa since 1994
|Article Title||An analysis of fixed capital formation in South Africa since 1994|
|© Publisher:||University of Johannesburg|
|Journal||Journal of Economic and Financial Sciences|
|Affiliations||1 University of Johannesburg|
|Publication Date||Apr 2007|
|Pages||7 - 20|
|Keyword(s)||Certainty equivalent, Coefficient of uncertainty, Expectations, Expected present value of investments, Fixed capital formation, Investment climate, Period of cautious optimism, Period of high and sustained uncertainty, Risk-adjusted present value and Uncertainty|
Fixed capital formation (investment) is an important but generally volatile component of aggregate spending. It is important in that it adds to the productive capacity of an economy. It is value-adding in the sense that it contributes to the growth potential of an economy, but it tends to be volatile as it entails substantial capital commitments based on uncertain expectations. The article undertakes a comparative analysis of fixed capital expenditure, using 1994 as an important year in which South Africa entered a new political dispensation. The article will attempt to evaluate the extent to which fixed capital decisions responded to a changing economic and political environment in terms of expectations and uncertainty.
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