 Foreign direct investment developments and the minerals industryMPRA Paper from University Library of Munich, Germany Abstract: This paper analyses the reaction of the minerals industry to foreign direct investment developments in South Africa. This is achieved by augmenting a Taylor1993 rule type central bank monetary policy reaction function with foreign direct investment inflows. The empirical results provide evidence of a statistically significant effect of an increase in foreign direct investment on output of the minerals industry, which briefly decreases followed by an increase and a peak out after 8 months, the effect of which is statistically significant between 6 and 14 months. The results further show a statistically significant effect of an increase in output of the minerals industry on foreign direct investment, which decreases and bottoms out after 6 months, the effect of which is statistically significant up to 8 months, which implies a feedback effect between foreign capital flows and output of the minerals industry. Foreign direct investment is, thus, important for economic activity, hence policymakers should monitor the developments in cross border capital flows to support economic activity and the minerals industry. Keywords: Foreign direct investment; Minerals industry; Economic cycles (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:124274 Access Statistics for this paper More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC. |
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