South Africa is in need of foreign direct investment (FDI) to increase economic growth and alleviate unemployment and poverty. To succeed in obtaining this FDI, South Africa must compete with the rest of the world for the available FDI. The global economic outlook is currently still uncertain and the growth of advanced economies are slowing down while Asia and Sub-Saharan Africa continue to grow at a steady pace. South Africa, as part of Sub-Saharan Africa, should take advantage of this growth on the African continent as well as internationally. Although studies have been performed to ascertain the tax policies of countries, the role of taxation applied by countries and the effects of taxation on FDI, there have been few studies on the tax policies specifically in respect of withholding taxes on interest. The new South African withholding tax on interest, applicable to South African source interest payments to non-residents, has been proposed to be included in terms of sections 49A to 49H in the Income Tax Act (58 of 1962) and will become effective from 1 January 2015. These sections have been introduced to align the said withholding tax and the section 10(1)(h) interest exemption, applicable to normal income tax in respect of non-residents, to the withholding taxes on interest and interest exemptions applied globally. Attention should be focused on whether the aforementioned global alignment will be achieved with the introduction of this legislation as South Africa had previously applied a similar legislation called non-residents’ tax on interest (NRTI) which appeared to be unsuccessful. Determining whether this legislation has been aligned with global practice will provide useful insight into whether this new legislation will promote, stagnate or be indifferent to FDI in South Africa, while at the same time not eroding the tax base with overly generous exemptions. This study reviews and compares the taxes implemented globally specifically in relation to withholding taxes on interest in a selection of countries, namely the developing countries Brazil, Russia, India, China, Mozambique and Namibia and the developed countries Germany and Denmark. Other determinants which will also have an impact on the comparisons of these withholding taxes are, for example, normal and withholding tax interest exemptions and repo rates – all of which have been incorporated into this comparative study. Based on the literature reviewed and the comparative analysis, the study concludes that the South African withholding tax on interest is effectively designed to keep attracting foreign lending in order to remain competitive in international markets. It is further shown that the South African legislation in respect of the section 10(1)(h) blanket interest exemption is aligned to that of global practice. / MCom (South African and International Taxation), North-West University, Potchefstroom Campus, 2014

This study analysed the short- and long-run interactions between the exchange rate and different types of investments in South Africa from 1970 to 2014. The study focussed on the portfolio theory, the life cycle of investment and the accelerator model of investment, which all found that investment plays an important part in the economic growth and development prospects of a country, thus a healthy investment environment needs to be present in order to attract investment inflows into the country. The conceptualisation of exchange rates focussed on the definitions and types of exchange rates that are in existence, as well as the theories of exchange rate determination which included the purchasing power parity, the interest rate parity, the portfolio balance approach and the Balassa-Samuelson model. These theories are all different but are essential for this study as assumptions made by these theories are relevant to the explanations of exchange rates. The Vector Autoregressive model (VAR), a multivariate Johansen co-integration approach and Granger causality test were conducted to analyse the interactions between the exchange rate and different types of investments. The short-run analysis found that there was a short-run relationship between the exchange rate and different types of investments in South Africa. However, this short-run interaction were found to be small, thus, not significant enough to cause disruptions to the exchange rate and to the inflow of investments into the country. The long-run analysis found that a there was a long-run relationship between the exchange rate and different types of investments in South Africa. This long-run relationship was also found to be negative. This study concluded that investments have a negative, long-run effect on the exchange rate, suggesting that a fall in the investments would cause an increase in the exchange rate in the long-run.

This study analysed the short- and long-run interactions between the exchange rate and different types of investments in South Africa from 1970 to 2014. The study focussed on the portfolio theory, the life cycle of investment and the accelerator model of investment, which all found that investment plays an important part in the economic growth and development prospects of a country, thus a healthy investment environment needs to be present in order to attract investment inflows into the country. The conceptualisation of exchange rates focussed on the definitions and types of exchange rates that are in existence, as well as the theories of exchange rate determination which included the purchasing power parity, the interest rate parity, the portfolio balance approach and the Balassa-Samuelson model. These theories are all different but are essential for this study as assumptions made by these theories are relevant to the explanations of exchange rates. The Vector Autoregressive model (VAR), a multivariate Johansen co-integration approach and Granger causality test were conducted to analyse the interactions between the exchange rate and different types of investments. The short-run analysis found that there was a short-run relationship between the exchange rate and different types of investments in South Africa. However, this short-run interaction were found to be small, thus, not significant enough to cause disruptions to the exchange rate and to the inflow of investments into the country. The long-run analysis found that a there was a long-run relationship between the exchange rate and different types of investments in South Africa. This long-run relationship was also found to be negative. This study concluded that investments have a negative, long-run effect on the exchange rate, suggesting that a fall in the investments would cause an increase in the exchange rate in the long-run.

This economic history and examination of the rubber products manufacturing industry in Peninsular Malaysia contributes to the subject of resource-based industrialization in the field of development studies. The development of the industry is traced from the 1920s to 2005 when the Second Industrial Master Plan came to an end. The findings are that local interests control 80 per cent of the industry, with foreign direct investment in the remaining 20 per cent, either as subsidiary companies of overseas manufacturers or in joint ventures with Malaysian investors. The industry has a dualistic structure, with foreign-owned and joint venture companies typically being more heavily capitalized and employing a larger workforce than wholly Malaysian-owned companies. Foreign and joint venture enterprises are more likely to export a greater volume of production than local firms. Nevertheless, the industry as a whole has a strong export-orientation and Malaysian-based exporters sell into markets worldwide. A detailed examination of the industrial components production sector by means of a questionnaire indicates that Malaysian producers rely on the Malaysian Rubber Board for the transfer of manufacturing technology. Technology transfer in the foreign and joint venture sector is from parent companies and joint venture associates overseas. The conclusion is that the rubber manufacturing industry is vertically integrated with local production of natural rubber used as raw material to produce a range of goods for sale to domestic and international markets. The 80 per cent Malaysian component indicates a stable domestic industry ably supported by local technology resources.

United States legislations have allowed U.S. companies to integrate with the economies of other countries allowing U.S. companies to outsource manufacturing and services abroad and take advantage of lower input cost because of cheap and skilled labor - an opportunity cost choice. In the global economy employment in the United States seems to be influenced simultaneously by variables such as outsourcing, international trade, foreign direct investment (FDI) and immigration. The shift in our economic and labor structure due to outsourcing will impact many different groups of people, mainly the next generation entering the labor market. The goal of this thesis is to examine the effects of outsourcing, Foreign Direct Investment, and International Trade on the U.S. labor market. It reveals that as an effect of outsourcing jobs have shifted to the emerging markets for cost and capability sourcing, but in response to the uproar on U.S. jobs being lost as businesses move abroad there seems more of job complementarily than substitution between parent and foreign affiliates. Also, companies are integrating vertically and that outsourcing is integral to a company’s success in the global economy. Furthermore FDI in the U.S. is not growing as rapidly as it is in Asia and many other parts of the world, when FDI is shown to positively affect a country’s economy. The U.S. because of the imbalance in international trade runs a huge trade deficit, which again takes a toll on the U.S. economy and employment. As the U.S. parent companies account for large shares of the overall U.S. economy, and foreign affiliates are also significant contributors to the U.S. economy there should be legislations that support multinationals to remain competitive in the global market as they contribute to strengthen the U.S. economy.

This dissertation comprises three essays on macroeconomic impacts of foreign direct investment (FDI). The first essay analyses the impact of FDI on the growth rate of total factor productivity of host countries. The essay focuses on 77 low- and middle-income countries and is based on balanced panel data for the period 1980-2008. The system GMM and common correlated effects (CCE) panel data methods are applied to estimate the models. Estimated coefficients show that FDI does not have any significant impact on the growth rate and the levels of TFP. The second essay investigates the relationship between FDI and domestic investment focusing on low- and middle-income countries, and using panel data for the period 1980-2012. It applies common parameter and heterogeneous parameter, static and dynamic, single equation and simultaneous equation panel data econometric techniques to study the relationship. Empirical findings suggest that FDI crowds our domestic investment. Our estimated coefficients also suggest that countries that have weak institutions, less developed financial systems, less human capital, less developed infrastructure, or economies that are more open, are more exposed to foreign competition and experience stronger crowding out from inward FDI. In the third essay, the influence of capital flows on the real exchange rate of recipient countries is analysed. The influence of three important capital flows, viz. foreign direct investment (FDI), foreign aid, and remittances, are assessed on the real exchange rate, using data for 45 middle- and low-income countries for the period 1980–2013. Both heterogeneous and homogeneous panel data methods are applied to estimate the real exchange rate models. The estimated coefficients of these models imply that foreign direct investment (FDI) and remittances do not influence the real exchange rate. Aid tends to depreciate the real exchange rate. Findings also suggest that financial development does not influence the exchange rate impact of aid in our sample countries. The study further finds that while aid tends to increase real exchange rate volatility, FDI and remittances do not have any robust influence on volatility. / February 2017

This project approaches ongoing debates over the impact of increased Chinese engagement in African countries through the lens of production and industrialisation. Emerging market FDI into Africa is growing rapidly, and an increasing proportion of this investment is into manufacturing and productive sectors. This trend is led by the commercial expansion of private Chinese manufacturing firms across the continent. The goal of this project is to examine the differentiated impacts on African industrialisation attempts of this phenomenon. It takes as its case study industrial zone development projects in Nigeria, namely, the two official economic and trade cooperation zones being developed as large-scale FDI projects by Chinese firms, with Chinese and Nigerian government support, in Lagos and Ogun states. Analytically, four dimensions of this process are identified for study: the home country context, the host country context, the zone structures and institutions, and the firms themselves. Special attention is paid to the interface between foreign actors and the particular political economy of Nigerian manufacturing, as well as the at times substantial gaps between policy and practice in terms of industrial planning, investment and production. The thesis argues that SEZ projects in general, including the Chinese ETCZs, are industrial policy tools that operate on particular assumptions regarding the organisation of global production. As such, they incentivise the insertion of export-oriented firms into established global networks supplying international markets. However, a closer examination of industrial policy in China, the production environment in Nigeria and the behaviour of internationalising firms reveals that these assumptions are not always accurate. Thus, the SEZ institution as it is currently conceived in Nigeria is ill-suited to lend support to the trend towards Chinese relocation of producer firms, as well as to the reality of Nigerian production—both of which are predicated on domestic and regional markets as the primary driver of African industrialisation and productive sector growth.

The most essential questions in economics is what determines economic growth? In theory FDI led to economic growth (Mello 1997), but empirical evidences indicate that the relationship is ambiguous (Masahiro & Iwasaki 2014). This thesis uses contemporary growth theories and econometric methods to empirically test for the association between foreign direct investment and economic growth in the six countries that form the Gulf Cooperation Council (GCC). The analysis indicates a positive relationship concerning FDI and GDP growth in the panel of GCC. The result furthermore supports the endogenous growth theory and provide insights on the regions progress towards income diversification whit respect to hydrocarbons.

This thesis complements current studies by focusing on developed OECD countries as they are the major sources and recipients of world FDI and current studies relating to developed countries using aggregate country FDI data are limited. This study empirically tests the determinants of FDI inflows and outflows and their relationship with economic growth using 2SLS simultaneous equations model between 1981 and 2008 for a sample of 20 developed OECD countries. The empirical findings suggest that FDI inflows do not contribute to economic growth in the host country and economic growth positively affects FDI inflows. In addition, trade openness and flexible employment protection legislation in the host country attract FDI inflows. In terms of FDI outflows, the results show that FDI outflows reduce economic growth in the home country, while economic growth in the home country increases FDI outflows. Moreover, high past level of outward FDI stock, trade openness, low labour cost and currency depreciation in the home country provide incentives for domestic firms to invest abroad. Therefore, this study does not support offering special incentives to foreign investors to attract FDI inflows or offering promotional policies to domestic firms to encourage FDI outflows. Instead, government should provide incentives for domestic investment and other sound policies to increase economic growth, which in itself provides a good environment to attract FDI inflows and to encourage FDI outflows. Keywords: FDI inflows, FDI outflows, two stage least squares simultaneous equations, economic growth, labour market flexibility.

This thesis explores a new competence of the investment policy Union conferred upon the European Union by the Lisbon treaty. The reform of the primary legislation in 2009 incorporated foreign direct investment among the components of the Common Commercial Policy. The purpose of this thesis is to analyse this new component, to describe the means of its execution and to discuss the European investment policy in the context of European law. This research aims to be an introduction to this topic in the Czech academia as it is a very topical issue due to the ongoing negotiations with the United States on a free trade agreement including an investment chapter. The thesis is composed of three chapters, each of them dealing with different aspects of the European investment policy. The first two parts are more of a theoretical nature, whereas the last part is a practical demonstration of the policy results in the form of negotiated agreements. Chapter One is introductory and acquaints the reader with the systematics of the Common Commercial Policy in the section of External action in the Treaty on the Functioning of the EU, its aims and principles and the scope of the newly conferred exclusive competence. It also defines basic terminology used in the thesis - the term foreign direct investment. Finally the last...