THE RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN SOUTH AFRICA FROM 1970-2019: AN ECONOMETRIC APPROACH

Abstract

This study explores the relationship between foreign direct investment and economic growth in South Africa for the period between 1970 to 2019. The primary objective of this study is to investigate into whether there is both, a short run and a long run relationship between foreign direct investment and economic growth in South Africa. The data used in this study is collected through secondary sources based online, that is, the South African Reserve Bank and Word Bank covering a range from 1970 to 2019. In this study, we discover a short run negative statistically significant relationship and long run negatively statistically insignificant relationship between foreign direct investment and economic growth in South Africa. One the policy implications emanating from this study is that policy makers and the South African government need to revise policies related to foreign direct investment inflow to boost economic growth and help resolve current macroeconomic challenges of high unemployment and low economic growth.