NEXUS AMID INSTITUTIONAL QUALITY, FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN SOUTH AFRICA

Abstract

This paper examines the nexus amid institutional quality, foreign direct investment and economic growth in South Africa (SA). The study employed ARDL techniques to evaluate the nexus using annual data sourced from World Development Indicator (WDI), 2022. The findings of the study show that inflation, education expenditure (EDE), FDI, and institutional quality are positively impacting SA economic growth over the long and short term. Inflation has both short-term and long-term positive effects on the growth of the South African economy, according to the results, which show that FDI, EDE, and the quality of institutions are all very important factors that determine the country's economic growth. Therefore, special attention must be paid to attracting FDI by improving the quality of institutions and increasing the EDE in the economy. Essentially, extra care should be taken to lower inflation to accelerate South Africa's economic growth and governments must fight corruption, bolster the rule of law, and provide a transparent and predictable regulatory environment to draw in both foreign and domestic investors. These programs have the potential to create jobs, facilitate technology transfer, and boost economic growth.