Foreign divestment, economic growth and development in South Africa: an empirical analysis

Matekenya, Weliswa; Moyo, Clement

doi:10.1108/jcefts-01-2022-0006

Cited by 8 publications

(6 citation statements)

References 53 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Hanyurwumutima and Gumede (2021) found that while public transport expenditure alone did not significantly impact output growth in South Africa's major metropolitan areas from 2003 to 2017, its combination with other social infrastructure had a notable effect. Moreover, Matekenya and Moyo (2023) suggested a negative impact of FDI on economic growth.…”

Section: Empirical Reviewmentioning

confidence: 99%

Driving economic growth in African countries: Do Chinese OFDI sectors matter?

Fambo,

Shunqi

2024

Social Science Quarterly

View full text Add to dashboard Cite

BackgroundRecent years have witnessed a growing interest among academics and policymakers in understanding the mechaninsms through which Chinese outward direct investment (OFDI) impact economic growth in Africa.MethodThis study utilzes a dataset spanning 41 African countries from 2005 to 2020,employing panel‐corrected standard error (PCSE) and quantile regression.ObjectiveThis study explore the mechanisms through which Chinese OFDI stock contributes to economic growth in Africa,with a particular focus on financial development and transport infrastructure.ResultsThe results indicate a significant and positive impact of the interaction between Chinese OFDI stock and both financial development and transport infrastructure on economic growth. The subregional analysis reveals varying correlations across regions, while the quantile regression analysis demonstrates a stronger effect on economic growth as we move to higher quantiles.ConclusionThe study underscores the importance of enhancing infrastructure and financial sector development to attract more Chinese OFDI and maximize its positive impact of economic growth in African nations. Hence, we recommend that African countries improve the infrastructure and financial sector of their country to attract more chinese OFDI and also enhance its effectiveness on their economic growth.

show abstract

Section: Empirical Reviewmentioning

confidence: 99%

Driving economic growth in African countries: Do Chinese OFDI sectors matter?

Fambo,

Shunqi

2024

Social Science Quarterly

View full text Add to dashboard Cite

show abstract

“…Various foreign divestment theories such as the eclectic paradigm, divestiture, institutional-based view, real options and neoclassical, have been employed by scholars to better understand foreign divestment (see Matekenya & Moyo, 2023;Konara & Ganotakis, 2020;Arte & Larimo, 2019;Musshoff, Odening, Schade, Maart-Noelck & Sandri, 2013;Edo & Nnadozie, 2023). The theoretical foundation of this paper is derived from the existing literature on foreign divestment.…”

Section: Conceptual and Theoretical Reviewmentioning

confidence: 99%

“…The theoretical foundation of this paper is derived from the existing literature on foreign divestment. Dunning's eclectic paradigm suggests that multinational enterprises expand overseas through FDI if competitive, location, and internalisation advantages are met (Matekenya & Moyo, 2023). Therefore, Boddewyn (1983) used Dunning's framework to develop a theory on foreign divestment, reversing the above-stated advantages to create a proto-theory on foreign divestment (Matekenya & Moyo, 2023).…”

Section: Conceptual and Theoretical Reviewmentioning

confidence: 99%

“…Dunning's eclectic paradigm suggests that multinational enterprises expand overseas through FDI if competitive, location, and internalisation advantages are met (Matekenya & Moyo, 2023). Therefore, Boddewyn (1983) used Dunning's framework to develop a theory on foreign divestment, reversing the above-stated advantages to create a proto-theory on foreign divestment (Matekenya & Moyo, 2023). According to Arte and Larimo (2019), the institution-based view developed by North (1990) emphasises the importance of formal and informal institutions for balanced economic growth.…”

Section: Conceptual and Theoretical Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Foreign divestment, financial development, and economic growth nexus in selected African countries: Autoregressive Distributed Lag (ARDL) Approach

Maduane-Komape,

Tshehla

2024

IJRBS

View full text Add to dashboard Cite

There is a limited amount of literature and data available on the topic of foreign divestment in African countries. The majority of research examining international divestment have primarily concentrated on a single-country context and have utilised factors at the level of individual firms. Unlike other papers, this study took a comprehensive approach by examining foreign divestiture across multiple countries on a continental scale. We analyse the correlation between foreign divestment, financial development, and economic growth over both short and long periods using annual data from 2000 to 2020 in 35 African nations. The principal estimating technique employed was the autoregressive distributed lag (ARDL) co-integration approach. The study's primary findings revealed a favourable enduring correlation between foreign divestiture and financial development, while indicating an unfavourable enduring correlation between foreign divestment and economic growth. Furthermore, the study found that there is a negative correlation between international divestiture and financial development in the short term. On the other hand, there is a positive and significant correlation between foreign divestment and economic growth. Thus, it is imperative for policymakers to implement rules with efficiency and promote foreign direct investment (FDI) inflows in order to enhance economic growth and development in African countries. Additionally, it is imperative for authorities to establish a surveillance system to monitor these connections and adapt policy accordingly in light of evolving economic conditions. The results of this study will not only enhance scholarly discussions, but also offer valuable insights to policymakers, practitioners, businesses, and foreign investors on how to effectively execute policies that promote economic growth and foreign investment in Africa. Moreover, this study provides suggestions for future investigations in the field of foreign divestment.

show abstract

“…Several studies deal with the effect of FDD on developing countries (for example, Zreik, 2023). Matekenya and Moyo (2023) suggest that FDD is detrimental to both economic growth and development and produce results showing that the adverse effects of FDD outweigh the benefits derived from FDI inflows. They also argue that the literature on the impact of FDD on economic growth needs to cover economic development.…”

Section: Implications For Developing Countriesmentioning

confidence: 99%

The antecedents and outcome of foreign direct divestment for developing economies

Merza,

Alhussainan

2023

RIBS

View full text Add to dashboard Cite

Purpose This paper aims to investigate the drivers of foreign direct divestment (FDD), how it relates to foreign direct investment (FDI) flows and stocks and its implications for developing countries. While divestment occurs for various reasons, it can be explained by reversing the propositions implied by FDI theories. Design/methodology/approach The authors combine FDI data and FDI theories to provide theoretical explanations for FDD and what it means for developing countries. FDI stock and flow data are used to derive inferences on trends in FDD and examine the implications of FDI theories on FDD. Findings Changes in the modes of global production and the rise of COVID-19 have reinforced the trend of stagnant or diminishing FDI flows observed since the global financial crisis, with implications for FDD. The authors demonstrate how the various FDI theories can be used to explain FDD, except for the currency areas hypothesis. By reviewing the costs and benefits of FDI, it is concluded that shrinking FDI flows and stocks may not be as detrimental for developing economies as it is typically portrayed. Originality/value The paper uses two original approaches to measure and explain the motives for FDD. The first is a reassessment of FDI theories in a way that makes them valid theories for FDD. The second original approach is to interpret data on FDI flows and stocks to imply the trends governing FDD, which is useful, as data on foreign divestment are not available on a country or regional basis.

show abstract

Foreign divestment, economic growth and development in South Africa: an empirical analysis

Cited by 8 publications

References 53 publications

Driving economic growth in African countries: Do Chinese OFDI sectors matter?

Driving economic growth in African countries: Do Chinese OFDI sectors matter?

Foreign divestment, financial development, and economic growth nexus in selected African countries: Autoregressive Distributed Lag (ARDL) Approach

The antecedents and outcome of foreign direct divestment for developing economies

Contact Info

Product

Resources

About