No abstract

No abstract

In this paper the role of institutions in determining foreign direct investment (FDI) is investigated using a large panel of 107 countries during 1981 and 2005. We find that institutions are a robust predictor of FDI and that the most significant institutional aspects are linked to propriety rights, the rule of law and expropriation risk. Using a novel data set, we also study the impact of institutions on FDI at the sectoral level. We find that institutions do not have a significant impact on FDI in the primary sector but that institutional quality matters for FDI in manufacturing and particularly in services. We also provide policy implications for institutional reform.

No abstract

IN THE FIRST QUARTER OF 2002, the real effective exchange rate of the South African rand was 25 per cent weaker than its value in the same period of the previous year and 45 per cent more depreciated than its average 1995 level. A depreciation of this magnitude raises the question as to what extent it can be considered an equilibrium phenomenon (that is, consistent with persistent movements in economic variables that regularly affect the real exchange rate), rather than a temporary deviation from equilibrium. The depreciation also raises the question of how long it would take for any temporary deviation to dissipate. In this paper, we address these questions by estimating an equilibrium path for South Africa's real effective exchange rate over the period from 1970 to the first quarter of 2002. The outline of the remainder of this paper is as follows. After reviewing the existing literature, the paper briefly describes the dynamics of the real exchange rate and its determinants. Subsequently it investigates the presence of a long-run