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Determinants of FDI in South Africa: Do macroeconomic variables matter?

Dondashe, Nandipha and Phiri, Andrew (2018): Determinants of FDI in South Africa: Do macroeconomic variables matter?

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Abstract

In this study we examine the macroeconomic determinants of FDI for the South African economy using data collected between 1994 and 2016 using the ARDL model for cointegration. The specific macroeconomic determinants which are used in the study are per capita GDP, the inflation rate, government size, real interest rate variable, and terms of trade. With the exception of inflation the remaining macroeconomic determinants employed in the study are positively and significantly related with FDI. However, in the short-run all variables are positively and significantly correlated with FDI. Collectively, these results have important implications for policymakers.

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