Open AccessDeterminants of foreign direct investment in Lesotho: evidence from cointegration and error correction modeling
Author(s) -
Malefa Rose Malefane
Publication year - 2013
Publication title -
suid-afrikaanse tydskrif vir ekonomiese en bestuurswetenskappe/south african journal of economic and management sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.277
H-Index - 17
eISSN - 2222-3436
pISSN - 1015-8812
DOI - 10.4102/sajems.v10i1.539
Subject(s) - foreign direct investment , cointegration , language change , extant taxon , economics , political instability , promotion (chess) , international economics , politics , political stability , error correction model , bureaucracy , macroeconomics , political science , biology , law , art , literature , evolutionary biology , econometrics
Over the past decade, Lesotho has recorded a substantial increase in levels of foreign direct investment (FDI) inflow, part of it prompted by trade privileges. Building on the extant literature, this study provides an empirical analysis of determinants of FDI in Lesotho. The study looks at how macroeconomic stability, regulatory frameworks, political stability and market size affect FDI. The evidence from this study shows that some of the foreign enterprises in Lesotho are there to serve a bigger South African market. Also, the country has benefited from a more export-oriented investment promotion strategy. Critical issues however remain that must be addressed if the country is to attract more FDI and retain existing investors .These issues pertain to bureaucratic red-tape, corruption and political instability