Faculty of Commerce, Law and Management (ETDs)

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    Impact of Covid-19 on Economic Indicators of Globalization: Evidence from Emerging and Developing Economies
    (University of the Witwatersrand, Johannesburg, 2023) Ashimosi, Gina Achitsa; Alovokpinhou, Sedjro Aaron
    This study analyzed the impact that the iCOVID-19 pandemic has on two important economic indicators of globalization, namely: bilateral trade flows and Foreign direct investment. This thesis used the trade gravity model, estimated using the Poisson Pseudo Maximum likelihood (PPML), to look at the influence of COVID-19 cases and death counts on bilateral trade. For foreign direct investment, this paper used a panel data analysis to establish the influence of iCOVID-19 cases and death counts have on FDI. The study finds a negative relationship between bilateral trade and iCOVID-19 cases and death counts for both country of origin and destination country. trade agreements, official language, contiguity and GDP have a positive influence on bilateral trade for both trading partners. When estimations are done using foreign direct investment (FDI) as dependent variable, real GDP is positively associated with FDI flows, the exchange rate is positive but to significant, while unemployment is negative but not significant as well. The 2020 dummy variable is negative and significant, thus FDI flows were adversely affected during that year compare to other years. consequently, the study found that the iCOVID-19 pandemic has had a significant impact on the two most important economic indicators of globalization international trade and FDI. some of the recommendations are that there should be a reduction in tariffs among countries to foster bilateral trade and i also diversification of commodities so that a country does not just rely ion one commodity as that would impact them negatively in a pandemic.
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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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    Exploring drivers of vertical forward integration in South Africa’s platinum mining industry
    (University of the Witwatersrand, Johannesburg, 2023) Pheto, Simon; Oro, Ufuo
    Historically, South Africa has positioned itself as a net exporter of refined and semi-finished Platinum Group Metals (PGMs) related products, which has stayed the same. This position generates much-needed foreign capital during commodity booms, but it has a long-lasting catastrophic impact on the economy. As a result, the South African PGMs industry is experiencing the lock-in effect of only specialising in exports of refined and semi-finished PGMs-related products. This trade pattern impairs South Africa’s capability to develop a comparative advantage in the export of finished PGMs-related products. This research seeks to identify, explore, and obtain an in-depth understanding of the drivers of vertical forward integration to migrate the PGMs industry from the export of refined and semi- finished PGMs-related products to finished PGMs-related products. The drivers of vertical forward integration were identified in the literature review. An in-depth understanding of these drivers was obtained through a qualitative research study. The themes associated with these drivers were identified by running structured interviews and analysing the data in Atlas.ti software. The structured interview results show that export-led industrialisation policies targeting international trade, innovation capabilities, relatedness of capabilities and foreign direct investments (FDI) will transform the South African PGMs industry into a manufacturing sector and exporter of finished PGMs-related products. However, the above drivers of forward vertical integration require a strong and progressive institutional regime with large institutional capital. The input-output model of the forward vertical integration process in South Africa’s PGMs industry takes the PGMs reserves as an input transformed resource and institutional regime as transforming resource. The four remaining drivers, international trade, innovation capabilities, the relatedness of capabilities and FDI are important components in the transforming process. The transforming process entails the creation of new knowledge and new technology, absorption of foreign knowledge and technology, the liberalisation of international trade and entrepreneurship. The output of the above model is finished PGMs-related products
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    Foreign direct investment and Africa’s social and economic development
    (2020) Rangwaga, Joan
    The study investigates the impact of FDI on social and economic development in Africa. This study analyses panel data for 52 African countries for the period 1990 to 2017 by undertaking a quantitative research strategy. The longitudinal/panel research design was used. Secondary data taken from the African Development Bank Group’s Information Highway Portal was used. The study uses multiple regression models to analyse the impact of FDI on three dependent variables for social and economic development. To estimate the impact of FDI on economic growth, the model will control for some of the standard growth factors such as capital, labour, government expenditure, technology transfer, and inflation/price stability. When running the inequality and poverty regression models, the model will control for other factors such as level of literacy and education, employment and population growth, in addition to the standard growth factors. The findings establish the importance of FDI in economic development, however, FDI did not make significant contribution towards reducing income inequality. The study also establishes the importance of FDI in poverty alleviation. The overall conclusion is that FDI is important to social and economic development. The study recommends that African countries create a favourable investment environment by improving institutional qualities (e.g. lower corruption, lower the number of days it takes to start a business, improve political stability, rule of law etc). The results of this study show that the internal factors (labour and domestic investment) are more effective than the external factors (FDI and technology transfer). FDI inflows should be directed to projects which fit with the host country development strategy and can transform host countries through the transfer of technology, human capital development and increased competition in domestic markets.