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This thesis examines both the long run and the short run impact of Exchange Rate Volatility on Foreign Direct Investment using an unbalanced panel data from three Sub-Saharan African countries of Kenya, Uganda and Tanzania. This is accomplished by generating Exchange Rate Volatility figures by the GARCH(1,1) methodology. The control variables included in this study include GDP, GDP growth, Economic Openness and Exchange rate. In order to capture the impact of economic openness on exchange rate volatility and thus foreign direct investment, different econometric specifications are adopted. The unbalanced panel data used in the analysis ranges for different time period for the specific countries considered in the panel.

Multinational enterprises (MNEs) are central drivers behind neo-liberal globalisation. These enterprises are usually centred in developed countries, with competitive operations in developing countries. The literature on MNEs and foreign direct investment usually focus on the motivation for investment, decisions on expansion, the structure of ownership of investment, the mode of entry, and the perception of risk. Fluctuation in the exchange rate is a source of uncertainty that affects MNEs' and other enterprises' market values. Enterprises' exposure to changes in the exchange rate has increased with the adoption of floating exchange rates and more intensive involvement in international trade. The conventional belief is that competition in the export market is positively related to a depreciation of the exchange rate, which will in turn be advantageous to the stock market, while the opposite is true for an appreciation of the exchange rate. If the contribution of import or intermediate imported inputs to the final production were quite large, an appreciation of the exchange rate will have a positive effect on input costs and the stock market. This study investigates the exchange rate exposure of multinational enterprises in South Africa to the bilateral exchange rate of the rand against the US dollar and the nominal effective exchange rate of the rand. It presents evidence on the direction and magnitude of currency exposure. From the empirical results presented in this study it can be concluded that the majority of MNEs are not significantly exposed to either one of the exchange rate changes. It has also been found that the majority of enterprises lose market value when their local currency depreciate against the US dollar, while the majority of South African enterprises are positively related to changes in the nominal effective exchange rate of the rand. MNEs that are not significantly exposed to changes in exchange rates could be subject to three possibilities. (1) The most obvious reason is that enterprises are not exposed to changes in the exchange rate. Enterprises in liberated (or •open") countries are more exposed to exchange rate movements as opposed to those in closed countries, such as the USA. (2) Enterprises could be engaged in on and off balance sheet hedging activities, which would reduce exchange rate exposures. (3) The methodology used in a study does not present the correct exposure results. / Thesis (M.Com. (Economics))--North-West University, Potchefstroom Campus, 2005.

This thesis examines the effects of price and exchange rate volatilities on the volume of trade corn, soybean, wheat and rice. Empirical results indicate that price volatility and exchange rate volatilities do not have effects on Canada’s export of wheat and soybean, and Canada’s import of corn and rice. This thesis also examined the effects of exchange rate and commodity price volatilities on developed countries’ trade and developing countries’ trade separately. Results show that trade between developing countries is more sensitive to exchange rate and commodity price volatilities than trade between developed countries. / Canadian Agricultural Trade Policy and Competitiveness Research Network (CATPRN)

This thesis examines the effects of price and exchange rate volatilities on the volume of trade corn, soybean, wheat and rice. Empirical results indicate that price volatility and exchange rate volatilities do not have effects on Canada’s export of wheat and soybean, and Canada’s import of corn and rice. This thesis also examined the effects of exchange rate and commodity price volatilities on developed countries’ trade and developing countries’ trade separately. Results show that trade between developing countries is more sensitive to exchange rate and commodity price volatilities than trade between developed countries. / Canadian Agricultural Trade Policy and Competitiveness Research Network (CATPRN)

This thesis examines the effects of price and exchange rate volatilities on the volume of trade corn, soybean, wheat and rice. Empirical results indicate that price volatility and exchange rate volatilities do not have effects on Canada’s export of wheat and soybean, and Canada’s import of corn and rice. This thesis also examined the effects of exchange rate and commodity price volatilities on developed countries’ trade and developing countries’ trade separately. Results show that trade between developing countries is more sensitive to exchange rate and commodity price volatilities than trade between developed countries. / Canadian Agricultural Trade Policy and Competitiveness Research Network (CATPRN)

The resource curse literature predicts how both aid and natural resources leads to real appreciation, hurting competitiveness and disfavoring the producing sector, which is bad news for a nation at the outset of its industrial buildup. Furthermore, a resource boom might lead to undesired behavior undermining national institutions – bearing implications of a “double resource curse”. Mozambique is an aid-dependent nation now facing the outbreak of a resource boom, as recent natural gas discoveries bring potential for transforming one of the world’s poorest countries to one of the world’s largest natural gas exporters within decades. The literature provides us with expectations of such successful transformation being dependent on both sound economic and institutional development. This study aims to uncover whether there are symptoms of Dutch Disease in the Mozambican economy, by tracking real appreciation through calculating effective exchange rate indices for the time period of 2002-2012 as well as analyzing sectoral development over the same time span. In continuation, we track institutional development in Mozambique with time-series data of institutional indicators developed by the World Bank. We find that institutions are weak and we observe signs of deterioration coupled with massive gas discoveries in recent years. The national economy is growing, and we cannot find signs of large shifts in sector development. However, the real exchange rate has appreciated in recent years. While the cause of this is not explained by our deployed literature, we find it interesting that fluctuations in foreign direct investments shows signs of correlation with the real exchange rate. The impact of FDI on developing economies will serve a potent variable for further research within resource curse frameworks.

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This dissertation consists of three essays. The first essay exploits a rich Longitudinal Survey on Immigrants to Canada (LSIC) dataset to determine the attributes that affect the probability of the incidence of remittances for a subsample of South East and Southern Asian immigrants. A logit regression model is used to address key motivations of the probability to remit by immigrants who live in Canada, with a particular focus on the immigrants' labour force participation and employment, education, housing, and living conditions. Results suggest that demographic, economic, and social factors are important for individuals in making decisions about remitting. Two questions are answered in the second essay. First, is there any significant impact of foreign financial flows on economic growth? Second, are remittances and grants more effective than loans in promoting growth? To answer these questions, the Generalized Method of Movements (GMM) technique is employed for a panel of 46 developing countries from all regions of the world during 1979 to 2011. Results suggest that remittances are most effective for all regions in promoting economic growth. Results reveal that grant-aid is also significantly associated with economic growth, while the impact of concessional loans is found to be insignificant. The varied performance of different types of financial flows is perhaps due to the fact that the obligation to repay loans made them less lucrative an option for investment mobilization. The third essay addresses the research question: “Does the exchange rate appreciate in the face of a voluminous remittances inflow?” To answer this question, the essay devises a mean group (MG) and pooled mean group (PMG) technique to investigate the exchange rate and remittance relationship for six South and South East Asian countries (Bangladesh, India, Pakistan, Philippines, Sri Lanka and Thailand). The essay reveals strong homogeneous currency appreciation that supports the ‘Dutch Disease’ theoretical framework. Remittances are also found to be significantly associated with the expansion of the non-tradable goods sector at the expense of the tradable goods sector (resource movement effect). The presence of ‘Dutch Disease’ calls for active policy intervention in the face of large increases in remittance receipts.

<p>Diss. (sammanfattning) Stockholm : Handelshögsk.</p>