The views expressed in this paper are those of the authors and do not necessarily represent those of the IMF or IMF policy.
The composition of capital flows to South Africa†
Article first published online: 4 DEC 2006
Copyright © 2006 John Wiley & Sons, Ltd.
Journal of International Development
Volume 19, Issue 2, pages 275–294, March 2007
How to Cite
Ahmed, F., Arezki, R. and Funke, N. (2007), The composition of capital flows to South Africa. J. Int. Dev., 19: 275–294. doi: 10.1002/jid.1324
- Issue published online: 23 FEB 2007
- Article first published online: 4 DEC 2006
- composition of capital flows;
- exchange rate volatility;
- financial development;
- JEL: F21;
- JEL: F31;
- JEL: F32
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.