The Interrelationship between Foreign Direct Investment and Gross Domestic Product in South Africa
Journal Title: International Journal of Agricultural Science and Research (IJASR) - Year 2018, Vol 8, Issue 4
Abstract
Foreign Direct Investment continues to play an essential role in developing economies and around the world. The linkage between foreign direct investment and economic growth is crucial for policy implication for the host country. Numerous studies have been conducted between foreign direct investment and economic growth, yet no agreement has developed. Therefore, it is viable to examine the nexus between foreign direct investment and economic growth in South Africa. The modified Toda-Yamamoto Granger causality test was used in this study covering time series data from 1970 to 2016. Unit root tests were employed to define the order of integration. The long-run relationship between the variables was determined using the Johansen co-integration test. To determine the direction of the variables Granger causality test was employed. The results indicated that both variables are integrated on order one I (1) after the first difference. The study confirmed a long-run relationship among the variables. The Granger causality test supports the neutral hypothesis, meaning that FDI does not Granger cause GDP and vice versa. Policymakers should focus on eradicating challenges that can affect inflows of FDI. This study contributes to the existing body of literature
Authors and Affiliations
Shiba W Trevor, Wu Yongchang, Wei Wenshan
Keywords
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- EP ID EP398145
- DOI 10.24247/ijasraug20185
- Views 108
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