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The composition of capital flows to South Africa

Author

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  • Faisal Ahmed

    (International Monetary Fund, 700 19 th Street, N.W., Washington, DC 20431, USA)

  • Rabah Arezki
  • Norbert Funke

    (International Monetary Fund, 700 19 th Street, N.W., Washington, DC 20431, USA)

Abstract

Unlike in most other emerging markets, capital flows to South Africa since the mid 1990s have been heavily biased toward portfolio flows. In this context, the objective of the paper is twofold: to identify the determinants of the level and composition of capital flows to emerging markets and to draw policy conclusions for South Africa. The empirical results suggest that further trade and capital control liberalisation would increase the share of FDI in South Africa. Additionally, a reduction in exchange rate volatility would affect the composition of capital flows in favour of FDI. Copyright © 2006 John Wiley & Sons, Ltd.

Suggested Citation

  • Faisal Ahmed & Rabah Arezki & Norbert Funke, 2007. "The composition of capital flows to South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(2), pages 275-294.
    • Handle: RePEc:wly:jintdv:v:19:y:2007:i:2:p:275-294
    DOI: 10.1002/jid.1324
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    Cited by:

    1. Arezki, Rabah & Dumitrescu, Elena & Freytag, Andreas & Quintyn, Marc, 2014. "Commodity prices and exchange rate volatility: Lessons from South Africa's capital account liberalization," Emerging Markets Review, Elsevier, vol. 19(C), pages 96-105.
    2. İlyas Şiklar & Merve Kocaman, 2018. "FDI and Macroeconomic Stability: The Turkish Case," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2018(1), pages 19-40.
    3. Valli, Mohammed & Masih, Mansur, 2014. "Is there any causality between inflation and FDI in an ‘inflation targeting’ regime? Evidence from South Africa," MPRA Paper 60246, University Library of Munich, Germany.

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