Thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy in the Faculty of Commerce, Law and Management, Wits Business School at the University of Witwatersrand, Johannesburg 2016 / The primary objective of this study was to investigate the role played by financial market development (FMD) in harnessing international capital flows of foreign direct investment (FDI) and foreign portfolio investment (FPI) in nine selected African economies, from 1980 to 2014. The study employed various econometric techniques such as the Generalised Method of Moments (GMM) for the dynamic panel data, Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration, Vector Error Correction Models (VECM) as well as Granger-causality tests. Using Principal Components Analysis (PCA), we also developed an infrastructural development index, as well as one for financial market development. The results highlighted that FDI to sampled African countries are determined by agglomeration effects, FPI, human capital development, real gross domestic product (GDP) growth, interest rates, inflation, infrastructure, trade openness, institutional quality, natural resources, and only certain individual financial market variables. FDI determinants are magnified by the application of the infrastructural and financial market development indices. FPI inflows, on the other hand, are influenced by FDI, exchange rates, stock market capitalisation, financial system liquidity, FPI agglomeration effects, capital account openness, and real GDP growth rates. The composite FMD index has a positive and highly significant effect on both FDI and FPI inflows to the selected African countries. There is reasonable evidence of bi-directional Granger causality between FDI and FPI, and FPI and overall FMD (FMD index), thus implying complementarity, as well as uni-directional Granger causality emanating from FDI to stock market capitalisation, FDI to domestic credit to the private sector by banks and also from FDI to overall financial market development in Botswana, Cote d’Ivoire, Egypt, Kenya, Mauritius, Morocco, Nigeria, South Africa, and Tunisia. In light of these findings, the policy implications are that African governments need to be conscientised on the benefits of financial market liberalisation and development. An open economy, complemented by adequate infrastructural and financial market development, plus appropriate regulation would play a significant role in attracting the type of international capital flow desired by the African host country’s level of economic development, without the concern of depleting other non-renewable natural resources. / GR2018

A dissertation submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in fulfilment of the Requirements for the Degree of Doctor of Philosophy 19 August 2015 / This thesis focusses on the impact of Foreign Direct Investment (FDI) on economic performance in selected African countries over the period 1980-2012. The thesis is divided into five chapters and three of them are empirical. Chapter 1 is the introduction. Chapters 2, 3 and 4 are empirical chapters examining the impact of FDI on various indicators of economic performance. Chapter 5 concludes by giving policy recommendations. In chapter 1 we provide a background, motivation, objectives, hypothesis to be tested, gaps in the literature, contributions of the study and the main findings. Chapter 2 examines the link between FDI and domestic investment and the role of host country factors namely financial development, institutional development and trade openness. We use the ordinary least squares, random effects, fixed effects and the system GMM methodologies on a panel of 48 African countries over the period 1980 to 2012. The results show that FDI has a crowding out effect on domestic investment and that improved institutions and trade openness do mitigate the substitutionary effect of FDI on domestic investment. This implies a need to come up with policies to improve local conditions by strengthening institutional quality and enhancing trade openness. Chapter 3 investigates the impact of FDI on productivity growth and the role of relative backwardness (the technology gap) on a panel of 45 African countries over the period 1980-2012. We use two measures of relative backwardness namely: the distance from technological frontier and the income gap. We apply the fixed effects, random effects and system GMM method to account for the issues of endogeneity. The results show a general insignificant effect of FDI on TFP growth. This suggests that FDI has a limited effect on productivity growth. The analysis of the advantage of relative backwardness does not support the convergence theory of Findlay (1978) and Wang and Blomstrom (1992). The large technology gaps in African countries hinder their ability to absorb foreign technologies from advanced countries. Chapter 4 analyses the long run dynamic relationship between FDI, exports, imports and profit outflows in 47 African countries over the period 1980-2012 by means of panel cointegration techniques. The results from the panel cointegration tests show that a long run relationship exists between the variables. Our findings provide evidence on the adverse long run effects of FDI on the current account in African economies. In particular, the results show that, FDI inflows lead to a decrease in exports and an increase in both imports and profit remittances. These findings confirm that indeed profit outflows by multinational companies are one of the main factors driving current account deficits in African countries. Chapter 5 is the conclusion. We provide a key summary of the key issues covered, the main findings, the key contributions of the study and the policy recommendations. We also suggest areas for further research in the future. / MT2017

Thesis (Ph.D.)--University of the Witwatersrand, Faculty of Commerce, Law and Management, School of Economic & Business Sciences, 2011. / The primary aIm of this study is to investigate the role that is played by the quality of infrastructure on export participation and on foreign direct investment using firm level data from the World Bank and employing maximum likelihood techniques such as the Tobit and Probit models. Results show that firm size, foreign ownership, internet access, international distance, electricity, customs and generator ownership matter in influencing export participation. Thus the reason why very few firms in Africa are outward oriented is partly because of poor market access and poor electricity and customs infrastructure. Ln the case of foreign direct investment (FDI) results show that foreign firms are attracted to a market, bigger in size and that market access is also very important. FDI results also show that a big market in an environment characterized by acute power problems negatively affects market seeking FDI. Customs problems generally have a weak negative effect on the probability to be foreign invested particularly inward FDI, but days to export matter to outward looking foreign producers. Water problems do not seem to matter for both FDI firms and exporters in this study. In light of these findings, there is need therefore for the government in collaboration with multilateral institutions like the World Bank, United Nations and other donor agencies to mobilise resources to improve Africa's infrastructure facilities particularly customs, power and international transport facilities . This could also be done by involving the private sector through various Public Private Partnership arrangements.

This study dealt with the impact of foreign direct investments on sustainable development in Africa in relation to poverty alleviation. The study aimed to show the link between these two areas and examine the impact of foreign direct investment on sustainable development, and whether such impact can lead to poverty alleviation and improve people's lives living under the poverty line.

This study dealt with the impact of foreign direct investments on sustainable development in Africa in relation to poverty alleviation. The study aimed to show the link between these two areas and examine the impact of foreign direct investment on sustainable development, and whether such impact can lead to poverty alleviation and improve people's lives living under the poverty line.

Thesis (MBA)--Stellenbosch University, 2005. / ENGLISH ABSTRACT: Foreign direct investment is generally welcomed and sought after by developing countries such as South Africa and seen as an important vehicle to raise capital and promote growth. This h as also been recognised by the South A frican government that indicated that foreign direct investment (FDI) has been identified as a requirement in their fight against poverty and to fuel development. South Africa, unfortunately has not been able to attract significant and sustainable amounts of FDI and has been identified by Unctad World Investment Report (2004: 14) as a country that is performing under its potential in attracting FDI. Other countries in Africa like Nigeria seem to be able to consistently attract more FDI while they are less competitive and politically less stable than South Africa. This study seeks to explore the reasons for this disparity in FDI flows with special reference toN igeria a nd South Africa, to assess t he difference inc ompetitiveness between the two countries, to asses the impact of this on FDI flows and to analyse and compare the reasons for FDI in South Africa and Nigeria utilising certain Unctad and WAIPA criteria. The conclusion is that multinational companies are profit seeking and that they will take on considerable risk (such as political instability for example) if the returns are high enough. Nigeria is attracting mostly resource-seeking FDI to its rich oil sector through multinational oil companies that have the technology and capability to extract the oil economically. This is happening regardless of the fact that the country's infrastructure and institutions are weak, widespread violence and political instability is at the order of the day, Nigeria has a small economy (and hence a small market) and is plagued by high levels of corruption. South Africa in contrast, while also having natural resources has attracted mainly market-seeking FDI. The South African markets however are not particularly big when compared to other first world countries and these FDI flows are not sustainable. South Africa would need to concentrate on becoming more efficient if it wants to attract more FDI but will be competing with other countries like Malaysia, India and Eastern Europe in the process that proves to be a challenge currently. / AFRIKAANSE OPSOMMING: Ontwikkelende lande soos Suid-Afrika verwelkom en soek oor die algemeen direkte buitelandse belegging en dit word beskou as 'n belangrike manier om kapitaal te bekom en groei te bevorder. Hierdie beskouing word ook gehandhaaf deur die Suid- Afrikaanse regering wat aangedui het dat direkte buitelandse belegging identifiseer is as 'n vereiste vir die stryd teen armoede en om ontwikkeling te bevorder. Ongelukkig het Suid-Afrika nog nie daarin geslaag om beduidende en standhoudende hoeveelhede direkte buitelandse belegging te lok nie en is deur die Unctad World Investment Report (2004:14) identifiseer as 'n land wat onderpresteer met betrekking tot sy vermoë om direkte buitelandse belegging te lok. Ander lande in Afrika, soos Nigerië, blyk in staat te wees om deurlopend meer direkte buitelandse belegging te lok, terwyl hulle minder kompeterend en polities minder stabiel is as Suid-Afrika. Die doel van hierdie studie is om die redes vir hierdie ongelykheid in die vloei van direkte buitelandse belegging te ondersoek met spesifieke verwysing na Nigerië en Suid-Afrika, om die verskille in kompeterendheid tussen die twee lande te oorweeg, om die impak hiervan op die vloei van direkte buitelandse belegging te ondersoek en om die redes vir direkte buitelandse belegging in Suid-Afrika en Nigerië te analiseer en te vergelyk met behulp van sekere van die Unctad en WAIPA kriteria. Die slotsom is dat multinasionale maatskappye winste najaag en dat hulle aansienlike risiko's sal neem (bv. politiese onstabiliteit), as die opbrengste hoog genoeg is. Nigerië lok meestal hulpbron-gedrewe direkte buitelandse belegging na sy ryk oliesektor deur internasionale oliemaatskappye wat beskik oor die tegnologie en kapasiteit om die olie ekonomies te ontgin. Dit gebeur ongeag die feit dat die land se infrastruktuur en organisasies swak is, wydverspreide geweld voorkom, politieke onstabiliteit aan die orde van die dag is, Nigerië 'n klein ekonomie (en dus 'n klein mark) het en geteister word deur hoë vlakke van korrupsie. In teenstelling hiermee het Suid-Afrika, wat ook oor natuurlike hulpbronne beskik, hoofsaaklik mark-gedrewe direkte buitelandse belegging gelok. Die Suid-Afrikaanse markte is egter nie eintlik groot nie as dit vergelyk word met ander eerstewêreldlande nie en hierdie vloei van direkte buitelandse belegging is nie volhoubaar nie. Suid-Afrika sal daarop moet konsentreer om meer effektief te word as hy meer direkte buitelandse belegging wil lok, maar sal moet meeding met ander lande soos Maleisië, Indië en Oos-Europa in 'n proses wat tans 'n uitdaging blyk te wees.

Thesis (MBA)--Stellenbosch University, 2006. / ENGLISH ABSTRACT: "Private intemational capital flows, particularly foreign direct investment, are vital complements to national and intemational development efforts. Foreign direct investment contributes toward financing sustained economic growth over the long term. It is especially important for its potential to transfer knowledge and technology, create jobs, boost overall productivity, enhance competitiveness and entrepreneurship, and ultimately eradicate poverty through economic growth and development (Nunnenkamp, 2002). As a result of these associated benefits, strategies for the attraction of FDI have become an increasingly important item on a country's economic agenda. However, prior to these strategies being developed and as a result of the concentration of high FDI flows to a limited number of countries, it is important to establish those salient factors that drive FDI flows. Africa has failed to hamess onto the FDI phenomenon and as a continent attracts very little FDI inflows. To date, only a limited number of empirical studies have been done on FDI flows to Africa. The objective of this study is to establish the macroeconomic and political factors that will stimulate and increase the flows of FDI to Africa. Pooled econometrical analysis, using the Random and Fixed Effects method is used in the empirical estimation. The findings differ according to the type of model used, however, the results in general, reveal that the level of industrialisation in a country, the state of its infrastructure, the country's economic growth rate and productivity levels are important determinants of the flows of FDI to Africa. The surprising result is that political stability and the level of openness in Africa are insignificant determinants of the flows of FDI to Africa. Very few studies take into account that Africa can be classified into various regional groupings viz; North, East, West, Central and Southem Africa, with previous studies focusing mainly on North Africa and Sub Saharan Africa. An additional objective of the study was to determine the regional specific determinants that drive FDI. The findings reveal that openness is important in North Africa and Central Africa whilst the level of industrialisation significant in a North African and West African context. The state of the infrastructure network is central to FDI flows in West and Central Africa whereas political stability is the key to promoting FDI flows to East Africa. A surprising finding is that none of the tested determinants were significant in a Southern African context. The above-mentioned findings demonstrate the need for further research in terms of the country specific determinants of FDI. This will serve to advise governments in the drafting of a country's national policy agenda and selection of FDI attraction strategy, so that the benefits thereof are maximised and costs thereto minimised. / AFRIKAANSE OPSOMMING: "Private internasionale kapitaalvloei, veral direkte belegging in die buiteland, is aanvullings wat van die allergrootste belang is vir nasionale en internasionale pogings wat met ontwikkeling verband hou. Buitelandse direkte belegging (BDB) dra by tot die finansiering van volgehoue ekonomiese groei op die lang termyn. Dit is veral belangrik vir die potensiaal daarvan om kennis en tegnologie oor te dra, werksgeleenthede te skep, algehele produktiwiteit te verstewig, mededingendheid en entrepreneurskap te verbeter, en om armoede uiteindelik deur ekonomiese groei en ontwikkeling uit te skakel" (Nunnenkamp, 2002). In die lig van hierdie gepaardgaande voordele, het strategieë vir die aantrekking van BDB 'n toenemend belangrike item op 'n land se ekonomiese agenda geword. Voordat hierdie strategieë egter ontwikkel word, en as gevolg van die konsentrasie van hoë BDB-vloei na 'n beperkte aantal lande, is dit belangrik om daardie vernaamste faktore wat BDB-vloei aandryf, te vestig. Afrika het versuim om die BDB-verskynsel in te span, en as 'n vasteland lok dit baie min BDB-invloei. Tot op datum is slegs 'n beperkte aantal empiriese studies oor BDB-vloei na Afrika gedoen. Die doelwit van hierdie studie is om die makroekonomiese en politiese faktore vas te stel wat die vloei van BDB na Afrika sal stimuleer en verhoog. 'n Poel van ekonometriese ontledings deur die metode van Stogastiese en Vaste Effekte word in die empiriese skattings gebruik. Die bevindings verskil volgens die tipe model wat gebruik word, maar die resultate oor die algemeen toon dat die vlak van industrialisasie in 'n land, die toestand van 'n land se infrastruktuur, die land se ekonomiese groeitempo en produktiwiteitsvlakke belangrike bepalers is van die vloei van BDB na Afrika. Die verbasende resultaat is dat politiese stabiliteit en die vlak van die oopheid van ekonomieë in Afrika onbelangrike bepalers van die vloei van BDB na Afrika is. 'n Geringe aantal studies neem in aanmerking dat Afrika in verskillende streeksgroeperings, nl Noord-, Oos-, Wes-, Midde-, en Suider-Afrika ingedeel kan word, met vorige studies wat hoofsaaklik op Noord-Afrika en sub-Sahara-Afrika fokus. 'n Bykomende doelwit van die studie was om die streek spesifieke bepalers wat BDB aandryf, vas te stel. Die bevindings dui daarop dat oopheid van ekonomieë in Noord-Afrika en Midde-Afrika belangrik is, terwyl die vlak van industrialisasie in die konteks van Noord-Afrika en Wes-Afrika betekenisvol is. Die toestand van die infrastruktuurnetwerk is sentraal tot BOB-vloei in Wes- en Midde-Afrika terwyl politiese slabiliteit die sleutel is tot die bevordering van BOB-vloei na Oos-Afrika. 'n Verbasende bevinding is dat geen van die getoetste bepalers in die konteks van Suider-Afrika betekenisvol was nie. Bogenoemde bevindings toon die behoefte aan verdere navorsing in terme van die spesifieke bepalers van BOB van 'n land. Dit sal dien om inligling te verstrek oor 'n land se nasionale beleidsagenda en 'n seleksie van strategie om BOB te lok, sodat die voordele gemaksimeer en die koste daarvan geminimiseer kan word.

This research focused primarily on certain bilateral agreements as well as relevant multilateral agreements that govern the world's investment system. Attention is given to governance in the world of foreign direct investment and the aims and objectives of the integration initiative, as well as to the centrality of investment law in the scheme. The role of investment and the effect this have on the development of Africa is also a focal point of this paper. The central objective of the integration initiative is also looked at against the backdrop of investment-rating agencies and investment flows around the world.

A Dissertation Submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in Fulfilment of the Requirements for the Degree of Doctor of Philosophy in Finance. 28th September 2015 / National real estate markets are globally recognized as essential segments of an economy and major contributors to national aggregate outputs. However, Africa’s national real estate markets are largely underdeveloped mainly because capital is in short supply. In this study, we examine the effects of foreign direct investment (FDI), foreign portfolio investments (FPI) and remittances on Africa’s real estate markets. We also sought to establish the financial market channels of capital inflows that are especially important for the real estate markets. In 1980s and 1990s, the widespread influence of the Bretton Woods institutions’ policy prescriptions saw many African countries implement far-reaching financial liberalization reforms. These reforms were meant to address low domestic savings and investments by opening the capital accounts of nations as to enable inflow of foreign capital. In this study, we test the externalities of these inflows. Specifically, we examine the effects of foreign capital inflows on African real estate markets by estimating a structural investment model using a pooled feasible generalized least square and general method of moment estimators in a panel set-up. We use data from Botswana, Kenya, Morocco, Namibia and South Africa for this test. Second, we examine causality relationships between real estate investments and foreign capital inflows using vector autoregressive (VAR) models and the Bai-Perron threshold test. Third, using the optimal general method of moment estimators and interactive term approach, we model the most important channel for foreign capital inflows’ externalities on the real estate markets. The panel results show that FDI and remittance do not have favourable associations with residential and non-residential real estate investments during their initial period of inflow, but in later periods, they correlate positively and significantly with real estate investments. The relation between FPI and the real estate investments is inconclusive. The VAR test suggests that the effects of foreign capital inflows on both residential and non-residential real estate investments vary across countries and markets. In some cases, the effects are time-varying and size-dependent, but in the majority of the cases, the effects are contingent on the size of the inflows. In respect of the most important channel(s) reflective of effects of cross-border flows on real estate markets, the results appear largely country-dependent: the credit market channel appears to stand out in reflecting most favourable externalities from cross-border flows. Further, evidence on the direct channel effect also varied from country to country. The indirect channel of the equity market is only important in South Africa, especially, when remittances are funnelled via the equity market channel. Based on the forgoing, it appears clear that in order to fast-track growth in national real estate markets, we should recommend that African countries put policies in place to motivate direct foreign capital inflows, encourage channelling of foreign capital inflows, particularly remittances and FDIs through the financial markets, with emphasis on credit markets. / MT2016

University of Macau / Faculty of Law