Business Administration and Business Economics -1
Abstract
South Africa’s reserve played a vital economic defence role during the economic crises of
the recent past. However, little research has examined the relationship between export value and the
reserve of South Africa. This paper contributes by assessing the impact of four independent variables
(export value, government effectiveness, foreign direct investment and GDP) on the reserve of South
Africa. Data were from the World Bank Archives of Global Financial Indicators and from the World
Bank Archives of Governance Indicators from 1996 to 2014. A cointegration and the OLS regression
test showed a long run relationship between export value, government effectiveness, foreign direct
investment and the reserve of South Africa. The Granger causality test revealed that foreign reserve
may influence export value (unidirectional), and that reserve may enhance government effectiveness.
The paper offers policy recommendations that may improve the level of reserve and provides an agenda
for further research.
References
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Aizenman, J.; Cheung, Y.W. & Ito, H. (2015). International reserves before and after the global crisis:
Is there no end to hoarding?. Journal of International Money and Finance, 52, pp. 102-126.
Bussière, M.; Cheng, G.; Chinn, M.D. & Lisack, N. (2015). For a few dollars more: Reserves and
growth in times of crises. Journal of International Money and Finance, 52, pp. 127-145.
Cheng, G. (2015). Balance sheet effects, foreign reserves and public policies. Journal of International
Money and Finance, 59, pp. 146-165.
Claessens, S., Stracca, L., & Warnock, F. E. (2015). International dimensions of conventional and
unconventional monetary policy. Journal of International Money and Finance.
Dunleavy, P. (2014). Democracy, bureaucracy and public choice: Economic approaches in political
science. Routledge.
Fernández-Villaverde, J.; Guerrón-Quintana, P.; Kuester, K. & Rubio-Ramírez, J. (2015). Fiscal
volatility shocks and economic activity. The American Economic Review, 105(11), pp. 3352-3384.
Globerman, S. & Shapiro, D. (2002). Global foreign direct investment flows: The role of governance
infrastructure. World development, 30(11), pp. 1899-1919.
Granger, C. (1969). Investigating causal relation by econometric models and cross-spectral methods.
Econometrica, 37(3), pp. 424–438.
Ilzetzki, E.; Mendoza, E.G. & Végh, C.A. (2013). How big (small?) are fiscal multipliers?. Journal of
Monetary Economics, 60(2), pp. 239-254.
Iyidoğan, P.V.; Dalgiç, B. & Akbulut, H. (2017). Is there a non-linear relationship between trade and
growth? A panel threshold analysis for Central and Eastern European countries. Acta Oeconomica,
67(1), pp. 117-136.
Jarreau, J. & Poncet, S. (2012). Export sophistication and economic growth: Evidence from China.
Journal of development Economics, 97(2), pp. 281-292.
Jensen, N. M. (2003). Democratic governance and multinational corporations: Political regimes and
inflows of foreign direct investment. International organization, 57(03), pp. 587-616.
Kumari, D. & Malhotra, N. (2014). Export-led growth in India: Cointegration and causality analysis.
Journal of Economics and Development Studies, 2(2), pp. 297-310.
Lane, P.R. & Milesi-Ferretti, G.M. (2007). The external wealth of nations mark II: Revised and
extended estimates of foreign assets and liabilities, 1970–2004. Journal of international Economics,
73(2), pp. 223-250.
Merovci1, S. & Sekiraça, E. (2014). The Impact of Trade Balance in the Current Account of Kosovo’s
Balance of Payments. Acta Universitatis Danubius. OEconomica, 10(1), pp. 94-107
Mosikari, T.J.; Senosi, C.M. & Eita, H.J. (2016). Manufactured exports and economic growth in
Southern African Development Community (SADC) region: A panel cointegration approach. Acta
Universitatis Danubius. OEconomica, 12(5), pp. 266 – 278.
Odhiamb, N. & Malefane, M. (2016). The Role of International Trade in Lesotho’s Economic Growth:
A Review. Acta Universitatis Danubius. OEconomica, 12(5), pp. 211-226.
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(No. w21162). National Bureau of Economic Research.
Ribeiro, A.P.; Santos, P.G.T. & Carvalho, V. (2013). Export-led growth in Europe: Where and what to
export? No. 5265. EcoMod.
Rodrik, D. (2006). The social cost of foreign exchange reserves. International Economic Journal, 20(3),
pp.253-266.
Rosenau, J.N. (1995). Governance in the Twenty-first Century. Global governance, 1(1), pp. 13-43.
Shirazi, N.S. & Manap, T.A.A. (2005). Export-led growth hypothesis: further econometric evidence
from South Asia. Developing Economies, 43(4), pp. 472-488.
Srinivasan, N.; Mahambare, V. & Ramachandran, M. (2015). Capital Controls, Exchange Market
Intervention and International Reserve Accumulation in India. No. 2015-103.
Sternberg, C.S. (2015). Political legitimacy between democracy and effectiveness: trade-offs,
interdependencies, and discursive constructions by the EU institutions. European Political Science
Review, 7(04), pp. 615-638.
Stevens, G.V. & Lipsey, R.E. (1992). Interactions between domestic and foreign investment. Journal
of international money and Finance, 11(1), pp. 40-62.
Stiglitz, J.E. & Rosengard, J.K. (2015). Economics of the Public Sector: Fourth International Student
Edition. WW Norton & Company.
Temiz, D. & Gökmen, A. (2014). FDI inflow as an international business operation by MNCs and
economic growth: An empirical study on Turkey. International Business Review, 23(1), pp. 145-154.
collection. The Economic Journal, 114(497), pp. 569-591.
Aizenman, J.; Cheung, Y.W. & Ito, H. (2015). International reserves before and after the global crisis:
Is there no end to hoarding?. Journal of International Money and Finance, 52, pp. 102-126.
Bussière, M.; Cheng, G.; Chinn, M.D. & Lisack, N. (2015). For a few dollars more: Reserves and
growth in times of crises. Journal of International Money and Finance, 52, pp. 127-145.
Cheng, G. (2015). Balance sheet effects, foreign reserves and public policies. Journal of International
Money and Finance, 59, pp. 146-165.
Claessens, S., Stracca, L., & Warnock, F. E. (2015). International dimensions of conventional and
unconventional monetary policy. Journal of International Money and Finance.
Dunleavy, P. (2014). Democracy, bureaucracy and public choice: Economic approaches in political
science. Routledge.
Fernández-Villaverde, J.; Guerrón-Quintana, P.; Kuester, K. & Rubio-Ramírez, J. (2015). Fiscal
volatility shocks and economic activity. The American Economic Review, 105(11), pp. 3352-3384.
Globerman, S. & Shapiro, D. (2002). Global foreign direct investment flows: The role of governance
infrastructure. World development, 30(11), pp. 1899-1919.
Granger, C. (1969). Investigating causal relation by econometric models and cross-spectral methods.
Econometrica, 37(3), pp. 424–438.
Ilzetzki, E.; Mendoza, E.G. & Végh, C.A. (2013). How big (small?) are fiscal multipliers?. Journal of
Monetary Economics, 60(2), pp. 239-254.
Iyidoğan, P.V.; Dalgiç, B. & Akbulut, H. (2017). Is there a non-linear relationship between trade and
growth? A panel threshold analysis for Central and Eastern European countries. Acta Oeconomica,
67(1), pp. 117-136.
Jarreau, J. & Poncet, S. (2012). Export sophistication and economic growth: Evidence from China.
Journal of development Economics, 97(2), pp. 281-292.
Jensen, N. M. (2003). Democratic governance and multinational corporations: Political regimes and
inflows of foreign direct investment. International organization, 57(03), pp. 587-616.
Kumari, D. & Malhotra, N. (2014). Export-led growth in India: Cointegration and causality analysis.
Journal of Economics and Development Studies, 2(2), pp. 297-310.
Lane, P.R. & Milesi-Ferretti, G.M. (2007). The external wealth of nations mark II: Revised and
extended estimates of foreign assets and liabilities, 1970–2004. Journal of international Economics,
73(2), pp. 223-250.
Merovci1, S. & Sekiraça, E. (2014). The Impact of Trade Balance in the Current Account of Kosovo’s
Balance of Payments. Acta Universitatis Danubius. OEconomica, 10(1), pp. 94-107
Mosikari, T.J.; Senosi, C.M. & Eita, H.J. (2016). Manufactured exports and economic growth in
Southern African Development Community (SADC) region: A panel cointegration approach. Acta
Universitatis Danubius. OEconomica, 12(5), pp. 266 – 278.
Odhiamb, N. & Malefane, M. (2016). The Role of International Trade in Lesotho’s Economic Growth:
A Review. Acta Universitatis Danubius. OEconomica, 12(5), pp. 211-226.
Rey, H. (2015). Dilemma not trilemma: the global financial cycle and monetary policy independence
(No. w21162). National Bureau of Economic Research.
Ribeiro, A.P.; Santos, P.G.T. & Carvalho, V. (2013). Export-led growth in Europe: Where and what to
export? No. 5265. EcoMod.
Rodrik, D. (2006). The social cost of foreign exchange reserves. International Economic Journal, 20(3),
pp.253-266.
Rosenau, J.N. (1995). Governance in the Twenty-first Century. Global governance, 1(1), pp. 13-43.
Shirazi, N.S. & Manap, T.A.A. (2005). Export-led growth hypothesis: further econometric evidence
from South Asia. Developing Economies, 43(4), pp. 472-488.
Srinivasan, N.; Mahambare, V. & Ramachandran, M. (2015). Capital Controls, Exchange Market
Intervention and International Reserve Accumulation in India. No. 2015-103.
Sternberg, C.S. (2015). Political legitimacy between democracy and effectiveness: trade-offs,
interdependencies, and discursive constructions by the EU institutions. European Political Science
Review, 7(04), pp. 615-638.
Stevens, G.V. & Lipsey, R.E. (1992). Interactions between domestic and foreign investment. Journal
of international money and Finance, 11(1), pp. 40-62.
Stiglitz, J.E. & Rosengard, J.K. (2015). Economics of the Public Sector: Fourth International Student
Edition. WW Norton & Company.
Temiz, D. & Gökmen, A. (2014). FDI inflow as an international business operation by MNCs and
economic growth: An empirical study on Turkey. International Business Review, 23(1), pp. 145-154.
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Published
2021-06-07
How to Cite
Collective Authors. (2021). Business Administration and Business Economics -1: Array. Acta Universitatis Danubius. Œconomica, 13(4). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1133
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