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The real exchange rate-foreign direct investment controversy in South Africa: an application of ARDL approach

This paper examines the relationship between real exchange rate and foreign direct investment. We apply autoregressive distributed lag (ARDL) bounds testing method to estimate short and long-run relationships between the series in South Africa over the period of 1987-2016. The results reveal long-ru...

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Main Authors: Dahir, Ahmed Mohamed, Mahat, Fauziah, Amin Noordin, Bany Ariffin, Ab Razak, Nazrul Hisyam
Format: Article
Language:English
Published: Canadian Center of Science and Education 2017
Online Access:http://psasir.upm.edu.my/id/eprint/60600/1/60600.pdf
http://psasir.upm.edu.my/id/eprint/60600/
http://ccsenet.org/journal/index.php/ijef/article/view/71450
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spelling my.upm.eprints.606002018-06-08T00:25:42Z http://psasir.upm.edu.my/id/eprint/60600/ The real exchange rate-foreign direct investment controversy in South Africa: an application of ARDL approach Dahir, Ahmed Mohamed Mahat, Fauziah Amin Noordin, Bany Ariffin Ab Razak, Nazrul Hisyam This paper examines the relationship between real exchange rate and foreign direct investment. We apply autoregressive distributed lag (ARDL) bounds testing method to estimate short and long-run relationships between the series in South Africa over the period of 1987-2016. The results reveal long-run cointegration relationships among variables are confirmed, implying real exchange rate, domestic market size stimulate the foreign direct investment in the long run. Furthermore, there is significant Granger unidirectional causality foreign direct investment to real exchange rate in short and long run and from market size to trade openness in a short run. This finding further suggests that the exchange rate instability are likely to be substantially harmful to a positive effect of FDI and should be avoided in South Africa. Canadian Center of Science and Education 2017 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/60600/1/60600.pdf Dahir, Ahmed Mohamed and Mahat, Fauziah and Amin Noordin, Bany Ariffin and Ab Razak, Nazrul Hisyam (2017) The real exchange rate-foreign direct investment controversy in South Africa: an application of ARDL approach. International Journal of Economics and Finance, 9 (11). pp. 207-217. ISSN 1916-971X; ESSN: 1916-9728 http://ccsenet.org/journal/index.php/ijef/article/view/71450 10.5539/ijef.v9n11p207
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description This paper examines the relationship between real exchange rate and foreign direct investment. We apply autoregressive distributed lag (ARDL) bounds testing method to estimate short and long-run relationships between the series in South Africa over the period of 1987-2016. The results reveal long-run cointegration relationships among variables are confirmed, implying real exchange rate, domestic market size stimulate the foreign direct investment in the long run. Furthermore, there is significant Granger unidirectional causality foreign direct investment to real exchange rate in short and long run and from market size to trade openness in a short run. This finding further suggests that the exchange rate instability are likely to be substantially harmful to a positive effect of FDI and should be avoided in South Africa.
format Article
author Dahir, Ahmed Mohamed
Mahat, Fauziah
Amin Noordin, Bany Ariffin
Ab Razak, Nazrul Hisyam
spellingShingle Dahir, Ahmed Mohamed
Mahat, Fauziah
Amin Noordin, Bany Ariffin
Ab Razak, Nazrul Hisyam
The real exchange rate-foreign direct investment controversy in South Africa: an application of ARDL approach
author_facet Dahir, Ahmed Mohamed
Mahat, Fauziah
Amin Noordin, Bany Ariffin
Ab Razak, Nazrul Hisyam
author_sort Dahir, Ahmed Mohamed
title The real exchange rate-foreign direct investment controversy in South Africa: an application of ARDL approach
title_short The real exchange rate-foreign direct investment controversy in South Africa: an application of ARDL approach
title_full The real exchange rate-foreign direct investment controversy in South Africa: an application of ARDL approach
title_fullStr The real exchange rate-foreign direct investment controversy in South Africa: an application of ARDL approach
title_full_unstemmed The real exchange rate-foreign direct investment controversy in South Africa: an application of ARDL approach
title_sort real exchange rate-foreign direct investment controversy in south africa: an application of ardl approach
publisher Canadian Center of Science and Education
publishDate 2017
url http://psasir.upm.edu.my/id/eprint/60600/1/60600.pdf
http://psasir.upm.edu.my/id/eprint/60600/
http://ccsenet.org/journal/index.php/ijef/article/view/71450
_version_ 1643837406554619904
score 13.244414

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