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The role of foreign direct investment (FDI) on domestic entrepreneurship in South Africa

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  • Busiswa Nxazonke
  • Roscoe Bertrum van Wyk

Abstract

This study examines the effect of foreign direct investment on domestic entrepreneurship in South Africa. With the focus on inward capital flows, the study specifically employed stock data and the Global Entrepreneurship Monitor to measure the impact. The data set analysed is for the period 2000–18, and after testing a Threshold Vector Autoregressive model, it was established that there is a short-run and long-run nonlinear relationship between foreign direct investment and domestic entrepreneurship in South Africa. The key findings of the study were that foreign direct investment has a positive short-run and long-run influence on domestic entrepreneurship. The policy recommendations are for government to create an eco-system that supports entrepreneurship through the lowering of regulatory burden on new domestic firms and enact robust sector-specific localisation policies for big corporations.

Suggested Citation

  • Busiswa Nxazonke & Roscoe Bertrum van Wyk, 2020. "The role of foreign direct investment (FDI) on domestic entrepreneurship in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 37(4), pages 587-600, July.
    • Handle: RePEc:taf:deveza:v:37:y:2020:i:4:p:587-600
    DOI: 10.1080/0376835X.2019.1667751
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    Cited by:

    1. Marek Csabay & Zuzana Vincúrová & Milan Stoch & Beáta Stehlíková, 2021. "Enterprise ownership patterns in the least developed districts of Slovakia," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(4), pages 807-838, December.

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