Electronic Theses and Dissertations (PhDs)

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Browsing Electronic Theses and Dissertations (PhDs) by SDG "SDG-8: Decent work and economic growth"

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    Impact analysis of institutional quality on foreign direct investment inflows into the Southern African Development Community (SADC) region
    (University of the Witwatersrand, Johannesburg, 2022) Malindini, Kholiswa; Pillay, Pundy
    The quality of governance has increasingly become a significant determinant of foreign direct investment inflows in recipient countries. Although extensive research has been conducted internationally to examine the role of institutional quality on foreign direct investment inflows, this concept has not been thoroughly interrogated in the Southern African Development Community (SADC) context. The region is poverty-stricken, unemployment rates are skyrocketing, economic growth is deteriorating, and the region only accounts for only one percent of global FDI. Thus, this study sought to examine three main objectives critically: first, the effect of institutional quality on foreign direct investment inflows into the SADC region; second, the influence of the financial development on the FDI-institutional quality nexus and thirdly, to assess whether countries’ income levels matter for attracting FDI inflows. FDI as a percentage of GDP was measured as a dependent variable, while institutional quality, financial development, natural resource availability, and GDP growth were the main explanatory variables. The study controlled for inflation rates, trade openness, and trade policy. An interaction term was generated to evaluate the effect of financial development on the FDI-institutional quality nexus in the SADC region. In order to achieve the research objectives, a mixed-methods approach was adopted, and a convergence research design was applied. Secondary data for other macroeconomic variables were drawn from the World Bank Development Indicators. In contrast, data for financial development were drawn from the International Monetary Fund’s Financial Development Index database, and data for governance indicators were drawn from the Worldwide Governance Indicators’ database. Primary data was collected through semi-structured interviews and survey questionnaires. Econometric models were developed to analyse panel data from 2011 – 2018 for 15 SADC member states to achieve the set objectives quantitatively. Specifically, the study adopted the Generalised System Methods of Moments (GMM) as the appropriate and efficient estimation technique for the analysis. Using a Pillar Integration Process, the data were integrated. The overall findings suggested that, while GDP growth, trade openness, and natural resources positively influence FDI inflows into the region and are statistically significant, institutional quality, inflation, trade policy and financial development are negatively and statistically significant coefficients towards FDI. The results revealed that a poor regulatory environment, the rule of law, and weak accountability are the main disincentives to improved quality of governance. The overall results indicated that weak institutional quality is still a significant challenge as far as inward FDI attraction is concerned; the lack of an enforcement mechanism directly impacts foreign investor property rights protection and eventually deters foreign investment inflows. Also, the unstable political framework that fails to sufficiently support economic institutions and ensure certainty, and the lack of political will, particularly by heads of government to implement and prioritize regional objectives over national interests, is a significant problem and stifles progress towards more profound integration. It also transpired that the financial markets and institutions within the region are not efficiently developed and are still fragmented, and this is attributed to macroeconomic instability and weak macroeconomic convergence. The findings also revealed that the countries’ income levels do not matter as far as FDI attraction is concerned. Based on these results, it may be necessary for SADC member states to adopt an institutional framework that promotes collaboration in the region and ensures effective and efficient implementation of the potential protocols. Given the dominance of national sovereignty over regional objectives, it may be worth examining the regimes that govern the member states; based on the view that sometimes non-compliance by member states emanates from the regime, which may sometimes not support regionalism. Convergent bilateral and multilateral arrangements are necessary for the region. The region needs to raise its export competitiveness by attracting domestic and foreign investments, and a rigorous trade integration process is a prerequisite. Policymakers in the region should focus on working together with institutions to promote development in the banking sector. Further, given the adverse effects of financial development on FDI inflows due to rising domestic credit by the banking sector, efforts should be made to maintain domestic credit levels to allow room for more FD
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    Measuring the Fiscal Space for South Africa to Support Economic Growth and Development
    (University of the Witwatersrand, Johannesburg, 2023) Motsepe, Dikgang; Pillay, Pundy
    A number of developing and emerging market economies are faced with economic challenges that will require governments to access additional resources in order to invest in their economies. This thesis seeks to answer two research questions: 1) Should governments increase fiscal spending or government debt to finance the investment in the productive capacity of the economy in order to support and drive economic growth? and 2) Will an increase in government debt reduce investment and economic growth? Time series data of emerging market economies were used from the period 1994 – 2017 to answer the research questions. The key findings from the emerging market economies analysis confirm the positive relationship between government debt and economic growth across all the identified countries. The research findings indicate that in the identified emerging market economies, economic growth was high, showing an average growth of 5.0% when debt levels were below the 90% ratio. For debt levels above 90% of GDP, economic growth was significantly low, averaging 0.5%. The study’s findings indicate that the emerging market economies showed an average public sector investment to GDP ratio of 23.6% at debt levels below 90% of GDP. For debt above 90% of GDP, public sector investment to GDP was slightly lower, averaging 15.3%. The key findings with regard to measuring debt sustainability using the debt limit of 68% to 97% to GDP as calculated by Ganiko, Melgarejo and Montoro (2016), is that all the emerging market economies have significant room to increase their debt levels, with South Africa obtaining an average debt ratio of 41% for the study period. The findings from the emerging market economies support the themes in the literature review that government debt can influence economic growth through the total factor productivity channel. This will entail increased government investment in infrastructure development, industrial development, education, health and nutrition. The thesis acknowledges that increases in debt levels will increase interest rates, thus reducing the fiscal space available to government. The increase in interest rates calls for a more effective utilisation of monetary policy instead of fiscal policy via the reduction of interest rates and purchasing of zero interest rate government bonds. To achieve this, this study calls for the increased role of monetary policy to use interest rates to achieve debt sustainability and to support economic growth. The thesis provides the policy direction for both fiscal and monetary policy on how to increase the ‘fiscal space’ available to government to raise additional resources to support economic growth and development. The study’s contribution to knowledge is the call for a change to the orthodox paradigm and narrative that debt is bad for economic growth and to promote the policy direction of using debt and increased spending to get economies to full employment. The policy directive seeks to support the use of government debt to fund structural reforms, to recapitalise State-Owned Entities, to support industrial development as well as to promote infrastructure and human capital development, with the objective to support economic growth. The thesis argues that debt is not harmful if directed towards the productive side of the economy. The paradigm is embedded within the Keynesian approach which is supported by the new growth theory, functional finance and modern monetary theory on fiscal stimulus and how to finance it. The paradigm shift also talks to moving away from conventional monetary policy and recommends that central banks decrease interest rates, monetise government debt, and create sovereign money in order to support government debt sustainability. The paradigm shift also seeks to change the conventional policy direction of central banks of increasing money supply indirectly using the banking sector, to directly increase money supply through fiscal policy in order to support economic growth. This will give central banks the tool to direct and influence spending in the economy to meet the objectives of economic growth and job creation. As argued by various economists, this can be achieved through better policy coordination between monetary and fiscal policy, and improved institutional arrangements which will ensure that the creation of money is directed towards economic growth and job creation
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    The measurement of decent work in South Africa: a new attempt at studying quality of work
    (2020-06) Mackett, Odile
    The quality of work is central to the growing inequalities in Africa and the world. Central to concerns about the decline in ‘labour share’ is the notion of decent work. In 1999, the International Labour Organisation coined the term ‘decent work’. The purpose of the Decent Work Agenda was not only to establish a definition of good work which can be used as a yardstick for workers, but also to create unity among workers, governments, and employers. Since the development of the term, numerous studies have been undertaken on the quantifiable aspects of the decent work framework, however, almost each study undertaken on the topic has measured different aspects of decent work or limited its enquiry to certain aspects of the definition of the term. As such, no study has measured decent work in a way which is reproducible without the resources which are required to undertake a survey. The purpose of this study is to construct a decent work index, using an iteration of the South African Labour Force Survey. This is useful firstly to identify measures which currently exist in secondary data and it is secondly beneficial in identifying shortcomings in relation to the use of the Labour Force Survey to measure decent work. Using sub-major (2-digit) occupation groups as units of analysis, the study found that there is an expected pattern around how occupations measure in relation to their degree of ‘decency’, meaning that higher paid professionals tend to have more decent occupations compared to low-skilled workers in elementary occupations. However, the higher up the occupational ladder the occupation is, the lower they score in terms of certain indicators, such as decent working time, and balancing work, family, and personal life. Furthermore, the study finds that occupation groups often score differently when the indicators which make up the decent work index are viewed individually rather than as a composite index. These findings imply that operationalising the idea and practice of decent work to understand and address inequality is no easy matter, but that democratising work to highlight the needs and preferences of workers could be one step in the right direction. At the minimum, it requires some engagement with different aspects of decent work in relation to different occupations. Analytically, a more nuanced conceptualisation of decent work is preferable to simple wage-based approaches often utilised by organisations representing the interests of workers.
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    The role of statistical numeracy in computational models of risky choice
    (2021) Werbeloff, Merle
    Numeracy is a strong predictor of general decision-making skill, and linked to differences in risk attitudes, such as risk aversion. However, the commonly used normative expected utility model assumes complete cognitive competence of the decision maker, and statistical numeracy is not considered directly in descriptive models of risky choice. These models are nevertheless used in policy-focused economics to assess individuals’ economic welfare, regardless of the effect of statistical numeracy. Thus, if model validity is dependent on the statistical numeracy of individual decision makers, resultant policy decisions may be biased. In an online quantitative empirical study, student respondents were categorised into numeracy groups based on latent mixture analysis of responses to statistical numeracy tests. Using the students’ risky choice responses to monetary lotteries, decision models were estimated using maximum likelihood parameter estimates on a subset of the data, followed by Markov Chain Monte Carlo Gibbs sampling methods for hierarchical Bayesian analysis. The results indicate significant differences between the numeracy groups on the utility parameter estimates, with risk aversion highest for low numeracy respondents. More complex models present identifiability problems. However, simpler models indicate successful outcomes in approximately two-thirds of in-sample estimates and out-of-sample predictions in the gain frame, based on parameter estimates specific to each numeracy group. The researcher proposes a numeracy-based modification to the models, citing the nudging and boosting policy initiatives of the behavioural economics literature as potential solutions to the presence of low numeracy and its effects on risky choice behaviour.