Industry, Trade and Investment in Africa

**Chapter 2**

**Abstract**

Trade and Investment

*Garebangwe Victoria Mabe-Madisa*

A strong and sustained economic growth emanating from trade and investment is needed to confront the challenges of unemployment and poverty. The mining sector is not performing as well as it used to, in South Africa. Reliance on minerals for production has its challenges, for example, being interrupted by strikes, resulting in nonproduction. To fill this gap, using a vector error correction

approach, the influence of oil and exchange rate on foreign direct investment (FDI) using quarterly data from January 2008 to January 2017 is investigated. The results for the Johansen approach show that the variables are cointegrated and that there is one cointegrating equation. The long-run cointegration equation shows that oil price and exchange rate have a negative long-run relationship with FDI. The country should continue to focus on policies aimed at strengthening its exchange

**Keywords:** trade, investment, exchange rate, oil price, foreign trade investments

Trade involves the transfer of goods or services from one person or entity to another, in exchange for money. A system or network that allows trade is called a market. There are two types of trade, namely, retail trade and wholesale trade. Retail trade involves the sale of goods from a very fixed location such as a store, in small or lots, to a purchaser, while wholesale trade is defined as traffic in goods that are sold as merchandise to industrial, commercial, institutional or to other

Investment is defined as the current commitment of resources in order to achieve later benefits. If resources and benefits take the form of money, investment is the present commitment of money for the purpose of receiving money later. In some cases, such as the purchase of a bank certificate of deposit, the amount of money to be obtained later is known. However, in most situations, the amount of

In a report which was recently released by Statistics South Africa [2], under the

"Environmental Economic Accounts Compendium", it was estimated that the country has 239 years of platinum-group metals (PGMs) reserves, while coal has 118 years of reserves available, and that there are only 38 years with regard to the amount of gold resources remaining [3]. The report also indicated that in the mining industry, gold was once the biggest employer; however, this all changed in

in South Africa

rate and stabilizing oil prices.

money to be obtained later is uncertain [1].

the year 2006 when PGMs took the lead [4].

**1. Introduction**

wholesalers.

**13**
