It is the purpose of this paper to unravel the oscillations and vacillations of foreign direct investment, debt, unemployment to economic growth nexus. The nexus of good governance, unemployment, economic growth and FDI is essential. Good economic governance shows a positive effect on growth, attracts FDI, reduces unemployment and attracts economic growth.
Bad economic governance is inclined to reduce economic growth, increases unemployment, reduces FDI, cause people to languish in debts and delays people in the investment process. A positive sign of corruption indicates that the higher the corruption, the lower the inward FDI. The researcher disagrees that corruption is suitable for foreign investors. The pendulum is tilted where investors prefer not to invest in countries with high corruption where there is a lack of enforcement laws.
Further, foreign investors have created an ecosystem where local small businesses cannot compete. More worrying is the state's credit rating that has seen a consistent downgrade by major credit rating agencies, which now stands at sub-investment grade, or what is referred to as "junk status". The main reasons quoted for this declivity was going to the dogs of Namibia's financial robustness due to massive fiscal lopsidedness, an astronomic debt excess baggage and limited enterprise capacity to manage shocks and address long-term structural pecuniary rigidities.
There has been a rift between the youth haves and have-nots in term of job allocation. The total household debt in Namibia is made up mostly of mortgages, car loans, student loans and credit card debt. The car loans, mortgages, credit cards and student loans make up most of 95% of Namibia household debt.
Table of Contents
1. Introduction
1.1 Conundrum
2. Literature Review
2.1 FDI Theories
2.1.1 Knowledge Capital Model
2.1.2 Hymer FDI Theory
2.1.3 Eclectic Paradigm Theory
2.2 The Vacillations and Oscillations FDI, Unemployment, Debt- Economic Growth Nexus
2.3 Taxonomies of FDI
2.3.1 FDI in Natural Resources
2.3.2 FDI in Infrastructure
2.3.3 FDI in Non-extractive and Non-infrastructure Sectors
2.4 Vacillations and Oscillations on the determinants of Household Indebtedness in Namibia
2.4.1 Changes in household income
2.4.2 Changes in interest rates.
2.4.3 The household house prices.
2.4.4 Housing equity withdrawal
2.4.5 Excessive consumption
2.4.6 Unemployment
3. Main causes of unemployment
3.1 Types of unemployment
3.2 Namibia’s High government expenditure through bloated departments
3.3 Namibia’s High government debt
3.3.1 Vacillations advocating State Borrowing
3.3.2 Vacillations Against State Borrowing
3.4 The effect of unemployment on individuals, households and business
3.4.1 Economic growth and sovereign debt
3.4.2 Vacillations and Oscillation of the GDP growth rate in Namibia
4. Results
4.1 Chinese is the highest FDI in Africa
4.2 Net Direct Investments in Namibia
5. Portfolio Investments
5.1 Granger Causality
5.2 Policy Recommendations
Research Objectives and Themes
This paper aims to investigate the complex nexus between foreign direct investment (FDI), national debt, unemployment, and economic growth in Namibia, seeking to unravel the cycles of volatility that have impacted the country's development.
- Analysis of the relationship between FDI, household debt, and macroeconomic stability.
- Evaluation of unemployment determinants and their impact on the Namibian economy.
- Examination of government expenditure, state debt levels, and their correlation with GDP growth.
- Assessment of the role of foreign investment from international sources, particularly China.
- Development of policy recommendations to foster sustainable job creation and economic growth.
Excerpt from the Book
1.1 Conundrum
The government of Namibia has done well in Meat industry and promotion of gender management in the Country. Youth unemployment has been a venerable challenge that impact countries such as Greece, Spain, Italy, Pakistan, South Africa, Namibia, Malaysia and others. However, most of the jobs created by FDI in the manufacturing sector do not impart skills that help the state after the investor has departed. Further, foreign investors have created an ecosystem where local small businesses cannot compete. (Kambonde & Ravinder, 2017). Some investors brought in workers from their home country to perform general tasks that could have generated employment for locals. In other cases, the locals who were employed were underpaid or mistreated. Such investors also repatriated profits to their home countries, leaving the host country as a source of cheap labour and free amenities. (Kambonde & Ravinder, 2017).
More worrying is the country’s credit rating that has seen a consistent downgrade by major credit rating agencies, which now stands at sub-investment grade, or what is referred to as “junk status” (Moody's Investor Services, 2017). The main reasons quoted for this declivity was going to the dogs of Namibia’s financial robustness due to massive fiscal lopsidedness, an astronomic debt excess baggage and limited enterprise capacity to manage shocks and address long-term structural pecuniary rigidities (Mukuddem-Petersen, Mah, Miruka, & Petersen, 2013).
Chapter Summaries
1. Introduction: Presents the background of foreign capital in Namibia post-independence and introduces the core problem regarding the unstable relationship between FDI, debt, and growth.
2. Literature Review: Explores existing theoretical frameworks for FDI and examines how household indebtedness and unemployment determinants interact within the economic landscape.
3. Main causes of unemployment: Analyzes the types and causes of unemployment in Namibia, including government expenditure and the implications of high sovereign debt.
4. Results: Provides empirical analysis and statistics regarding Chinese FDI inflows and the recent trends of net direct investments in Namibia.
5. Portfolio Investments: Investigates the movement of portfolio capital, utilizes Granger causality tests to evaluate variable relationships, and provides actionable policy recommendations.
Keywords
Oscillation, Vacillation, foreign Direct Investment, Debt, Economic Growth, Unemployment, Nexus, Namibia, Household Indebtedness, Macroeconomics, Granger Causality, FDI Theories, Fiscal Policy, Sovereign Debt, Labour Market
Frequently Asked Questions
What is the primary focus of this research?
The paper primarily explores the interconnected nature of foreign direct investment, national debt, unemployment, and economic growth in Namibia, identifying the volatile "vacillations and oscillations" that define this nexus.
What are the central themes examined in the study?
The study focuses on the effectiveness of FDI in creating local skills, the impact of high government debt, the structural challenges of youth unemployment, and the influence of credit ratings on national economic stability.
What is the main research objective?
The core objective is to unravel how these four pillars—FDI, debt, unemployment, and growth—interact and whether there is a causal link that can be managed through improved policy frameworks.
Which scientific methods are utilized?
The research employs time-series analysis, including Augmented Dickey-Fuller (ADF) tests for stationarity, Auto-Regressive Distributed Lag (ARDL) models for cointegration, and Pairwise Granger Causality tests to determine causal directions between variables.
What topics are covered in the main body?
The main body covers FDI theories, taxonomies of investment, determinants of household debt in Namibia, the causes of unemployment, the impact of government expenditure, and empirical results regarding Chinese FDI and direct investment trends.
Which keywords best characterize the work?
Key terms include foreign direct investment (FDI), economic growth, unemployment, Namibia, sovereign debt, household indebtedness, and Granger causality.
How does the author view the role of corruption in FDI?
The researcher strongly disagrees with the notion that corruption is suitable for foreign investors, noting that high levels of corruption act as a deterrent and increase the cost of doing business.
What conclusion does the study reach regarding debt and economic growth?
The study finds no significant causal effect between GDP, general debt, foreign debt, and local debt, suggesting that current debt structures in Namibia may not be directly dictating economic growth trends in the way traditional theory might suggest.
What are the key policy recommendations provided?
The author recommends an effective PR investment campaign, the establishment of a national job creation strategy for 2021-2050, the promotion of vocational education modeled on countries like Germany, and the creation of a Job Creation Index Fund.
- Arbeit zitieren
- David Mpunwa (Autor:in), 2020, The Vacillations and Oscillations of Foreign Direct Investment, Debt, Unemployment and Economic Growth Nexus in Namibia, München, GRIN Verlag, https://www.grin.com/document/536769
