Saka, N and Lowe, J (2010) An assessment of comovement between foreign direct investment (FDI) and South African construction sector (SACS) output. In: Egbu, C (ed.) Proceedings of 26th Annual ARCOM Conference, 6-8 September 2010, Leeds, UK.
Abstract
Proponents of open account contend that Foreign Direct Investment (FDI) promotes the growth of infrastructure through positive externalities. However empirical evidence on whether FDI promote growth in developing countries remains inconclusive. This paper investigates the comovement between FDI, the South African Construction Sector (SACS) output and the Gross Domestic Product (GDP). The data on FDI, SACS and GDP were extracted from the UNCTAD data base for the years 1970 through 2008. The study used econometric methodology including unit root test, Johansen cointegration and Granger causality tests to analyse the data. The result indicates that FDI, SACS, and GDP are stationary after first difference. Johansen cointegration test finds a long term contemporaneous relationship between FDI and SACS. Though FDI does not Granger cause SACS. However, FDG (FDI/GDP ratio) Granger causes SACG (SACS/GDP ratio) after a considerable lags. The paper concludes that the lack of causality between FDI and SACS is because South Africa was only recently readmitted into the global economy and that there are potentials for increase FDI impact on SACS.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | econometrics; foreign direct investment; gross domestic product; South Africa |
| Index terms: | methodology, evidence, construction sector, South Africa, econometric, Granger causality test, developing country, gross domestic product, cointegration, foreign direct investment |
| Subjects: | economic analysis, evaluation and assessment methods, industry analysis, research methods, factor and component analysis, development economics, Geography |
| Topics: | International Construction, Business Strategy, Geographical Context, Research Practice |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here