An Analysis of Drivers of International Investment Decisions in South Africa

Abstract

The study investigated the drivers of international investment decisions in South Africa. As part of its investment drive, the government has embarked on a series of activities to lure investors. That been the case it appears that most of the empirical studies focused mainly on the relationship between investment and economic growth, hence very little seems to be known about the empirical evidence of other drivers of international investment decisions and their impact on the South African economy. The findings are envisaged to provide information and to add policy formulation to attract the much needed foreign investment. The autoregressive distribution lag approach was chosen to analyse the long and the short run relationships amongst the variables of interest and Granger Causality analysis was also employed to determine causal relationships between dependent variable and its regressors. The results indicated that a stronger statistical and economic basis for empirical error correction model was established by the presence of cointegration amongst the variables and all the regressors were found to have a positive effect in the stock of foreign direct investment. Empirical findings suggest that government should ensure stable macroeconomic policies and labour disputes that result into prolonged strike actions must be minimised.