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The composition of capital flows to South Africa
Author(s) -
Ahmed Faisal,
Arezki Rabah,
Funke Norbert
Publication year - 2007
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.1324
Subject(s) - capital flows , portfolio , emerging markets , volatility (finance) , liberalization , international economics , economics , foreign direct investment , capital (architecture) , monetary economics , context (archaeology) , capital market , composition (language) , portfolio investment , international trade , financial economics , macroeconomics , market economy , geography , finance , linguistics , philosophy , archaeology
Abstract Unlike in most other emerging markets, capital flows to South Africa since the mid 1990s have been heavily biased toward portfolio flows. In this context, the objective of the paper is twofold: to identify the determinants of the level and composition of capital flows to emerging markets and to draw policy conclusions for South Africa. The empirical results suggest that further trade and capital control liberalisation would increase the share of FDI in South Africa. Additionally, a reduction in exchange rate volatility would affect the composition of capital flows in favour of FDI. Copyright © 2006 John Wiley & Sons, Ltd.