Determinants of foreign direct investment inflows in Namibia
Date
2017
Authors
Hangula, Penehafo Ndeutalala Twaafetwa Tulina
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Abstract
This study investigates the dominant determinants of Foreign Direct Investment in Namibia. The second part of the study evaluates whether FDI received in Namibia is beneficial for the Namibian economy. The study uses two different methods to test for stationarity: Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP). The study makes use of the Ordinary Least Square (OLS) in conjunction with the cointegration (CI) and Error Correction Models (ECM) to determine the factors that influence FDI in Namibia, using data for the period of 1990- 2014. The results show that, in the short-run, Foreign Direct Investment is significantly influenced by GDP, taxes, exchange rates and Drought occurrence. The results of the second part of the study were to test whether FDI received is beneficial for the Namibian economy. The Granger causality test was used to test this relationship. The results of the Granger causality test revealed that FDI is indeed beneficial for the economy. Hence, it is significant in explaining GDP in Namibia. The study recommends a review of the administration of the current investment system, which should highlight the role of each player in the economy. The study further recommends that a good quality of governance, reduced bureaucracy, low-interest rate and well-developed infrastructure will enhance investor’s confidence. Expansionary fiscal and monetary policies should be applied to stimulate GDP growth and to increase Foreign Direct Investment.
Keywords: Foreign Direct Investment, Gross Domestic Product, Stationarity, Cointegration, Error Correction Modelling, Taxes and Exchange Rates.
Description
Thesis (M.M. (Finance & Investment)--University of the Witwatersrand, Faculty of Commerce, Law and Management, Wits Business School, 2016
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Citation
Hangula, Penehafo Ndeutalala Twaafetwa Tulina (2017) Determinants of foreign direct investment inflows in Namibia, University of the Witwatersrand, Johannesburg, <http://hdl.handle.net/10539/23643>