The neoclassical theory suggests that free flows of external capital should be equilibrating and thereby facilitating smoothening of an economy's consumption or production patterns. South Africa has a very low savings rate, making it highly dependent on capital inflows which create instability and volatility in global markets. A policy dilemma is undoubtedly evident: capital inflows help to cater for the domestic low savings and at the same time the inflows pose instability, a threat on competitiveness and volatility challenges to the same economy due to their impact on exchange rates. The question is: are all forms of capital flows equally destabilizing? Since studies based on South Africa considered only the relationship between aggregate capital flows and real exchange rate, modelling individual components of capital flows could enlighten policy formulation even further. The composition of the flows and their effects on the composition of aggregate demand determine the evolution of real exchange rate response to surges in capital flows. Through co-integration and vector error correction modelling techniques applied to South African data between 1990 and 2010, the study found out that foreign portfolio investment exerts the greatest appreciation effect on the South African real exchange rate, followed by other investment and finally foreign direct investment. Thus the impact of capital flows on real exchange rate in South Africa differs by type of capital. This presents varied policy implications.

This study assessed the effects of currency volatility on the Johannesburg Stock Exchange. An evaluation of literature on exchange rate volatility and stock markets was conducted resulting into specification of an empirical model.The Generalised Autoregressive Conditional Heteroskedascity (1.1) (GARCH) model was used in establishing the relationship between exchange rate volatility and stock market performance. The study employed monthly South African data for the period 2000 – 2010. The data frequency selected ensured an adequate number of observations. A very weak relationship between currency volatility and the stock market was confirmed. The research finding is supported by previous studies. Prime overdraft rate and total mining production were found to have a negative impact on Market capitalisation. Surprisingly, US interest rates were found to have a positive impact on Market capitalisation. This study recommended that, since the South African stock market is not really exposed to the negative effects of currency volatility, government can use exchange rate as a policy tool to attract foreign portfolio investment. The weak relationship between currency volatility and the stock market suggests that the JSE can be marketed as a safe market for foreign investors. However, investors, bankers and portfolio managers still need to be vigilant in regard to the spillovers from the foreign exchange rate into the stock market. Although there is a weak relationship between rand volatility and the stock market in South Africa, this does not necessarily mean that investors and portfolio managers need not monitor the developments between these two variables.

This study examined the impact of real exchange rates on economic growth in South Africa. The study used quarterly time series data for the period of 1994 to 2010. The Johansen cointegration and vector error correction model was used to determine the impact of real exchange on economic growth in South Africa. The explanatory variables in this study were real exchange rates, real interest rates, money supply, trade openness and gross fixed capital formation. Results from this study revealed that real exchange rates, gross fixed capital formation and real interest rates have a positive long run impact on economic growth, while money supply and trade openness have a negative long run impact on economic growth in South Africa. From the regression results, it was noted that undervaluation of the currency significantly hampers growth in the long run, whilst it significantly enhances economic growth in the short run. As such, the policy of depreciating the exchange rates to achieve higher growth rates is only effective in the short run and is not sustainable in the long run. Based on the findings of this study, the researcher recommended that misalignment (overvaluation and undervaluation) of the currency should be avoided at all costs. In addition, the results of the study showed that interest rates also have a significant impact on growth and since interest rates have a bearing on the exchange rate, it was recommended that the current monetary policy in South Africa should be maintained.

Thesis (LLM)--University of Stellenbosch, 1999. / ENGLISH ABSTRACT: This thesis deals with the Trade, Development and Cooperation Agreement (TDCA) between the European Union and the Republic of South Africa, which was concluded in October 1999. In particular, the agreement is analysed in the light of the negotiating process between the parties, the contents of the agreement, the applicability of WTO law and the compatibility of the agreement with it and the Port and Sherry Agreement. Since the EU emphasised its aim to commence economic and development cooperation with other African, Caribbean and Pacific (ACP) countries on a reciprocal basis during the negotiations for a successor of the Lomé Convention, the TDCA between the EU and South Africa had to be seen as a "pilot project" for future cooperation agreements between countries at different levels of development. The TDCA between the EU and South Africa is therefore not only very important for the two concerned parties, but could serve as an example for further negotiations between the EU and other ACP countries. Thus the purpose of this thesis is to examine the TDCA between the EU and South Africa from a wider global perspective. The thesis is divided into six Chapters: The first Chapter provides an introduction to the circumstances under which the negotiations between the EU and South Africa commenced. It deals briefly with the economic situation in South Africa during the apartheid era and presents reasons why the parties wanted to enter into bilateral negotiations. The introductory part furthermore presents an overview of the contents of the thesis. The second chapter contains a detailed description of the negotiating process that took place between the parties and shows why it took 43 months and 21 rounds of negotiations to reach a deal. South Africa's partial accession to the Lomé Convention and the conclusion of separate agreements such as the Wine and Spirits Agreement, are also analysed. Chapter three presents the various components of the TOCA and illustrates what the negotiators achieved. This chapter on the TOCA concludes with an evaluation of the Agreement and shows the potential benefits to South Africa and the EU. Since the Agreement had to satisfy international rules, the provisions of the General Agreement on Tariffs and TradelWorld Trade Organisation (GATTIWTO) were of major importance. The EC Treaty, however, does not contain any provision that indicates whether, or how, an international agreement like the GATTIWTO penetrates the Community legal order. In Chapter four, accordingly, questions are raised regarding the extent to which the bilateral agreement between South Africa and the EU was influenced by the GATTIWTO provisions and how these rules were incorporated into the agreement. Furthermore, since the parties agreed on the establishment of a free trade area, this chapter deals with the question of in how far the TOCA is in line with Article XXIV GATT. In addition to the GATT provisions, the TOCA is also affected by the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). Therefore Chapter five deals with TRIPs in connection with the TOCA. The use of the terms "Port" and "Sherry" as the major stumbling block to the conclusion of the TOCA is analysed more closely. The final part, namely Chapter six, provides a summary of the results of the investigation. Furthermore, a conclusion is provided with regard to the question of whether the TOeA can be seen as an example for further trade relations between the EU and other ACP countries. / AFRIKAANSE OPSOMMING: Hierdie tesis is gerig op die Handels-, Ontwikkelings- en Samewerkingsooreenkoms (TDGA) tussen die Europese Unie (EU) en die Republiek van Suid Afrika wat in Oktober 1999 gesluit is. Die ooreenkoms word veral in die lig van die onderhandelingsproses tussen die partye, die inhoud van die ooreenkoms, die toepaslikheid van Wêreldhandelsorganisasiereg en die versoenbaarheid daarvan met die ooreenkoms en die Port en Sjerrie-ooreenkoms ontleed. Aangesien die EU sy oogmerk van wederkerige ekonomiese en ontwikkelings-gerigte samewerking met ander lande in Afrika en die Karibiese en Stille Oseaan-Eilande gedurende die onderhandelings vir 'n opvolger van die Lomé Konvensie beklemtoon het, moes die ooreenkoms tussen die EU en Suid-Afrika as 'n "loodsprojek" vir toekomstige samewerkingsooreenkomste tussen lande wat op verskillende vlakke van onwikkeling is, gesien word. Die Handels-, Ontwikkelings- en Samewerkingsooreenkoms tussen die EU en Suid-Afrika is dus nie net baie belangrik vir die betrokke partye nie, maar dit kan ook as 'n voorbeeld vir verdere onderhandelings tussen die EU en lande van Afrika en die Karibiese- en Stille Oseaan-Eilande dien. Die doel van dié tesis is om die Handels-, Ontwikkelings- en Samewekingsooreenkoms tussen die EU en Suid-Afrika vanuit 'n meer globale perspektief te beskou. Die tesis is in ses Hoofstukke ingedeel: Die eerste hoofstuk bied 'n inleiding tot die omstandighede waaronder die onderhandelings tussen die EU en Suid-Afrika begin het. Dit behandel die Suid- Afrikaanse ekonomiese situasie onder apartheid kortliks en toon hoekom die partye tweesydige onderhandelings wou aanknoop. Verder bied die inleidende deel 'n oorsig oor die inhoud van die tesis. Die tweede hoofstuk bevat 'n gedetailleerde beskrywing van die onderhandelingsproses wat tussen die partye plaasgevind het en toon aan waarom dit drie-en-veertig maande geduur het en een-en-twintig onderhandelingsrondtes gekos het om die saak te beklink. Suid-Afrika se gedeeltelike toetrede tot die Lomé Konvensie en die sluit van aparte ooreenkomste soos die Port- en Sjerrieooreenkoms word ook ontleed. Die daaropvolgende hoofstuk bespreek die verskillende komponente van die Handels-, Ontwikkelings- en Samewerkingsooreenkoms en toon wat die onderhandelaars bereik het. Hierdie hoofstuk oor die Ooreenkoms sluit af met 'n evaluering daarvan en dui die potensiële voordele van die Ooreenkoms vir Suid- Afrika en die EU aan. Aangesien die Ooreenkoms internasionale reëls moes tevrede stel, was die voorskrifte van die Algemene Ooreenkoms oor Tariewe en Handel (GATT) van uiterste belang. Die EG-verdrag bevat egter geen voorskrif wat aandui óf, of hoé, 'n internasionale ooreenkoms soos GATTNVTO die regsorde van die Europese Gemeenskap binnedring nie. Die vraag oor in hoeverre die tweesydige ooreenkoms tussen Suid-Afrika en die EU deur die GATTIWTO voorskrifte beïnvloed is, en oor hoe hierdie reëls in die ooreenkoms opgeneem is, word dus in Hoofstuk vier aangeraak. Aangesien die partye ooreengekom het om 'n vrye handeisarea tot stand te bring, behandel hierdie hoofstuk ook die vraag oor in hoeverre die TOGA met Artikel XXIV GATT strook. Tesame met die GATT-voorskrifte word die TOGA ook deur die Ooreenkoms ten opsigte van Handelsverwante Aspekte van Intellektuele Eiendomsreg (TRIPs) geraak. Hoofstuk vyf behandel daarom hierdie aspek ten opsigte van die TOGA. Die gebruik van die terme "Port" en "Sjerrie" as die vernaamste struikelblok tot die sluiting van die TOG-ooreenkoms word ook deegliker ontleed. Die laaste gedeelte, naamlik Hoofstuk ses, bied 'n opsomming van die resultate van die ondersoek. Verder word 'n gevolgtrekking voorsien ten opsigte van vraag of die TOGA as 'n voorbeeld vir verdere handelsverwantskappe tussen die EU en ander lande in Afrika en die Karibiese en Stille Oseaan-eilande beskou kan word.

This study analysed the intricacies of trade flows imbibed in the EU-SA TDCA. It assessed the trade creation and trade diversion effects of this bilateral trade agreement – using the top 10 selected commodity exports. This follows the report on the Harmonised System (HS) at the 2-digit codes. A Gravity Model Approach on bilateral trade flows is grounded on panel data models for the period 2000-2017 between South Africa as exporter country and the twenty EU countries (EU-20) as importer country-block out of the twenty-eight countries (EU-28). The study reports that the EU-SA TDCA enhanced significant trade expansion and trade creation effects. Mixed results for GDPs and GDPPKs for both South Africa and the EU countries were reported, but the overall results showed that the bilateral agreement do affect South African commodity exports more negatively, albeit with few positive effects from the EU countries in particular. Besides, ICTSA does have a negative effect on commodity exports, while the South African REER has the positive effect on export models. Lastly, the distance as a proxy of transportation costs negatively affects South Africa’s exports, while common colonial relationship and English as common official language have both a positive effect on exports. The findings imply that trade policies should focus on adequate telecommunication tools, alongside fair trade practices allowing South Africa to integrate with the global market, promote economic growth as well as enhance competitive advantage in most sectoral trades. / Business Management / M. Com. (Business Management (International Business and Finance))