The role of foreign direct investment (FDI) on domestic entrepreneurship in South Africa |
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Authors: | Busiswa Nxazonke Roscoe Bertrum van Wyk |
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Institution: | 1. University of Stellenbosch Business School, Stellenbosch University, Stellenbosch, South Africa b.nxazonke@gmail.com;3. University of Stellenbosch Business School, Stellenbosch University, Stellenbosch, South Africa;4. National Treasury of South Africa, Pretoria, South Africa |
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Abstract: | 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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Keywords: | Foreign direct investment entrepreneurship entrepreneurial activity firm creation global entrepreneurship monitor |
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