Thesis (M. Com. (Economics)) -- University of Limpopo, 2021 / Investment as one of the main macroeconomic variables can ensure development of
infrastructure and economic growth through increasing productivity and attracting
investors. This study examined key determinants of investment activities by means of a
comparative analysis between the SADC and BRICS groups during the period 2004-
2019. The key variables were the real exchange rate, real interest rate and trade
openness.
The analysis began by reporting unit roots tests, which paved way for employing Panel
Autoregressive Distributive Lag (PARDL) methodology in the existence of different orders
of integration. To estimate the long run relationship between the variables, we made use
of the panel Johansen cointegration test, Pedroni test, Kao test and the Johansen Fisher
cointegration test. Through the PARDL, the exchange rate and trade openness were
found to be positive and statistically significant determinants of investment in SADC
although statistically insignificant in the BRICS group. In addition, interest rates yielded
insignificant results in the SADC region while, on the contrary, yielded a negative and
statistically significant relationship in the BRICS group. The Granger causality test
indicated a bi-directional causality in the exchange rate-investment and trade openness investment nexus for the SADC group while there was no causality in the BRICS group.
It can be concluded that trade openness and exchange rate are key determinants of
investment in the SADC region while interest rates are key in the BRICS group. It is
therefore recommended that in order to attract investors and boost investment activities
the SADC group need to focus more on exchange rate stability and trade openness while
the BRICS group need to pay more attention to the flexibility of interest rates. This is
beneficial on trading patterns, more for South Africa as it can be found in both groups.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ul/oai:ulspace.ul.ac.za:10386/3825 |
| Date | January 2021 |
| Creators | Letsoalo, Lourence. |
| Contributors | Ncanywa, T. |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
| Format | xiii, 142 leaves |
| Relation |
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