A model of foreign direct investment flows at the municipal level in South Africa
Abstract
Purpose
The purpose of this paper is to assess the relationship between South Africa's foreign direct investment (FDI) and economic fundamentals at the municipal level.
Design/methodology/approach
The paper develops a data set and an econometric model to analyze FDI flows at the municipal level in South Africa.
Findings
The empirical results derived from municipal level data support the findings in some of the established literature (which for the most part uses country‐level data) and indicates: that FDI tends to flow to areas with high factor (capital, labour and land) productivity; and that increases in higher labour productivity lead to higher investment.
Research limitations/implications
This paper has used a cross‐section of municipalities. A further area of research would be to carry out a similar exercise with panel data.
Practical implications
These findings indicate that FDI flows can be considered at the municipal level and this justifies the need for careful selection of the geographic basis for economic policy and development planning.
Originality/value
Whereas most studies on FDI use country‐level data as standard geographic units of analysis, this paper analyzes FDI flows at the municipal level.
Keywords
Citation
Okeahalam, C. and Dowdeswell, M. (2008), "A model of foreign direct investment flows at the municipal level in South Africa", Journal of Modelling in Management, Vol. 3 No. 3, pp. 249-267. https://doi.org/10.1108/17465660810920582
Publisher
:Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited