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Foreign Direct Investment: South Africa’s Elixir of Life?


Author Info

  • C.E. Moolman

    (Department of Economics, University of Pretoria)

  • E.L. Roos

    (Department of Economics, University of Pretoria)

  • J.C. Le Roux

    (Department of Economics, University of Pretoria)

  • C. B. Du Toit

    (Department of Economics, University of Pretoria)


Foreign direct investment (FDI) has of late been revered as the solution to a great deal of the developing world’s problems. This paper seeks to examine the macroeconomic link between foreign direct investment in South Africa, and its resultant impact on potential output. Cointegration techniques and time-series data from 1970-2003 are utilized to construct a model suitable for policy analysis. Policy options, through which the level of foreign direct investment inflow can be raised, and its’ ultimate impact on output are investigated. Empirical results indicate that market size, openness, infrastructure and nominal exchange rate are factors on which South African policy makers should focus when seeking to attract foreign direct investment.

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Bibliographic Info

Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number 200605.

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Length: 29 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:pre:wpaper:200605

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Related research

Keywords: foreign direct investment; potential output; economic growth; macroeconomic model;

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Cited by:
  1. Carike Claassen & Elsabé Loots & Henri Bezuidenhout, 2011. "Chinese Foreign Direct Investment in Africa," Working Papers 261, Economic Research Southern Africa.


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