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Bilateral FDI from South Africa and Income Convergence in SADC

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  • J. Paul Dunne

    (School of Economics, University of Cape Town)

  • Nicholas Masiyandima

    (School of Economics, University of Cape Town)

Abstract

This study investigates whether bilateral foreign direct investment between a technology leader country and follower countries has technology and productivity externalities that speed up income convergence among the countries. The study is based the SADC region, in which South Africa is identified as both the technology leader and a major source of FDI for the other 14 developing countries in the region. Using countries’ per capita incomes time series over a period spanning from 1980 to 2011, the results of the study show that bilateral FDI between South Africa and countries in the region fosters income convergence in the region. Countries that have higher FDI stocks from South Africa exhibit higher rates of convergence towards both the regional average per capita income and South Africa’s per capita income, than those that host less FDI stocks.

Suggested Citation

  • J. Paul Dunne & Nicholas Masiyandima, 2017. "Bilateral FDI from South Africa and Income Convergence in SADC," School of Economics Macroeconomic Discussion Paper Series 2017-04, School of Economics, University of Cape Town.
  • Handle: RePEc:ctn:dpaper:2017-04
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    Cited by:

    1. Felix A. Nandonde & Richard Adu-Gyamfi & Tinaye S. Mmusi & Herbert Wamalwa & Simplice A. Asongu & Johannes P. Opperman & Jeremiah R. Makindara, 2019. "Linkages and spillover effects of South African foreign direct investment in Botswana and Kenya," Working Papers of the African Governance and Development Institute. 19/039, African Governance and Development Institute..
    2. Christian S. Otchia & Simplice A. Asongu, 2019. "Industrial Growth in Sub-Saharan Africa: Evidence from Machine Learning with Insights from Nightlight Satellite Images," Working Papers 19/046, European Xtramile Centre of African Studies (EXCAS).
    3. Asongu, Simplice A & Odhiambo, Nicholas M, 2019. "Foreign direct investment,information technology and economic growth dynamics in Sub-Saharan Africa," Working Papers 25593, University of South Africa, Department of Economics.
    4. repec:bla:afrdev:v:29:y:2017:i:4:p:674-688 is not listed on IDEAS

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