Foreign Divestment, Domestic Investment, and Economic Growth Relationship in Southern African Development Community During the COVID-19 Pandemic: Panel Ardl Approach

Authors

Vincent Moloi, Refilwe Maduane-Komape

Abstract

This study examined the relationship between foreign divestment (FD), domestic investment (DINV), and economic growth (GR) in the Southern African Development Community (SADC) in the context of COVID-19 for the period 2015-2021. Against the backdrop of the global health crisis and using the autoregressive distributed lag (ARDL) method, the study aims to examine the complex relationship between FD, DINV, GR. The study revealed the there is a positive long-term relationship between FD and economic growth. In addition, a significant negative long-term relationship was detected between FD and domestic investment. Furthermore, in the short term, this study identified a negative and significant association among FD, DINV, and GR when FD was considered as the dependent variable. The findings demonstrate that FD has a beneficial effect on long-term economic growth, but it has a detrimental impact on domestic investment. This indicates a possible trade-off between attracting foreign capital and promoting domestic investment. Furthermore, the temporary negative correlation between FD, DINV, and GR stressed that immediate economic circumstances can be negatively impacted by changes in foreign investment, thereby disturbing both domestic investment and overall economic performance.

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Suggested Citation (APA 7th)

Moloi, V., Maduane-Komape, R. (2024). Foreign Divestment, Domestic Investment, and Economic Growth Relationship in Southern African Development Community During the COVID-19 Pandemic: Panel Ardl Approach. International Journal of Applied Research in Business and Management, 5(2). https://doi.org/10.51137/ijarbm.2024.5.2.14