The Role of Foreign Direct Investment (FDI) on Domestic Entrepreneurship in South Africa

The Role of Foreign Direct Investment (FDI) on Domestic Entrepreneurship in South Africa

Author: 
Nxazonke, Busiswa
Place: 
Oxon
Publisher: 
Taylor and Francis
Date published: 
2020
Record type: 
Responsibility: 
van Wyk, Roscoe Bertrum
Journal Title: 
Development Southern Africa
Source: 
Development Southern Africa Vol 37 No 4 2020 pp 587-600
Abstract: 

This study examines the effect of foreign direct investment on domestic entrepreneurship in South Africa. With the focus on inward capital flows, the study specifically employed stock data and the Global Entrepreneurship Monitor to measure the impact. The data set analysed is for the period 2000-18, and after testing a Threshold Vector Autoregressive model, it was established that there is a short-run and long-run nonlinear relationship between foreign direct investment and domestic entrepreneurship in South Africa. The key findings of the study were that foreign direct investment has a positive short-run and long-run influence on domestic entrepreneurship. The policy recommendations are for government to create an eco-system that supports entrepreneurship through the lowering of regulatory burden on new domestic firms and enact robust sector-specific localisation policies for big corporations.

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CITATION: Nxazonke, Busiswa. The Role of Foreign Direct Investment (FDI) on Domestic Entrepreneurship in South Africa . Oxon : Taylor and Francis , 2020. Development Southern Africa Vol 37 No 4 2020 pp 587-600 - Available at: http://library.au.int/role-foreign-direct-investment-fdi-domestic-entrepreneurship-south-africa