Is there a link between BRIC foreign direct investment and SADC export performance?

Figures & data

Figure 1: BRIC outward FDI and SADC exports, 2003–11 (US$ million)

Note: RHS refers to read values on the right-hand side, while LHS refers to read values on the left-hand side.
Sources: ITC (2012), Zephyr (2012) and FDImarkets® (2012). Compiled by authors.

Table 1: BRIC outward FDI flows to SADC, SADC total exports and SADC exports to BRIC, 2003–11 (US$ million)

	2003	2004	2005	2006	2007	2008	2009	2010	2011
BRIC outward FDI to SADC (US$ million)	3 143	3 112	1 012	2 639	5 927	18 642	3 372	3 019	11 363
SADC exports to BRIC (US$ million)	4 171	7 394	10 232	16 400	22 622	36 736	29 784	45 327	49 626
SADC exports to the world (US$ million)	56 102	73 077	89 746	114 779	134 800	175 156	119 884	160 786	194 050

Sources: ITC (2012), Zephyr (2012) and FDImarkets® (2012). Compiled by authors.

Table 2: Correlation and covariance of SADC exports and BRIC FDI

	SADC exports to the world		SADC exports to BRIC
Variables	Exports	FDI	Exports	FDI
Exports	1 (1 080 000 000)	0.96 (926 000 000)	1 (10 758 392)	0.59 (56 842 056)
FDI		1 (860 000 000)		1 (860 000 000)

Notes: The covariance is indicated in brackets.

Table 3: Estimates of the FDI–export link for all SADC countries

	Dependent variables
Independent variables	Without dummy Model 1: SADC exports to BRIC	With dummy Model 2: SADC exports to BRIC
Constant	−7.20*** (6.05)	−9.31*** (−6.74)
BRIC FDI	1.34*** (10.93)	1.31*** (10.06)
Dummy	–	2.83* (1.82)
R-squared	0.50	0.54
Adjusted R-squared	0.50	0.53
F-statistic	76.44***	57.16***
Number of observations	153	153

Notes: The dependent variable is exports (X). Figures in parentheses are t-statistics.

*Significant at 10% level.

**Significant at 5% level.

***Significant at 1% level.

Table 4: Granger causality test results: SADC exports and BRIC FDI, 2003–11 (US$ million)

Null hypothesis^a	Lag	Obs.^b	F-statistic	Probability	Decision
SADC exports to the world
	1	53	16.04130	0.00020***	Reject (at 1%)
	2	40	6.32168	0.00450***	Reject (at 1%)
	3	30	3.70924	0.02600**	Reject (at 5%)
	1	53	6.11710	0.01680**	Reject (at 5%)
	2	40	2.83930	0.07200**	Reject (at 5%)
	3	30	1.47047	0.24870	Do not reject
SADC exports to BRIC
	1	53	0.67787	0.41420	Do not reject
	2	40	0.24218	0.78620	Do not reject
	3	30	0.26981	0.84650	Do not reject
	1	53	0.67248	0.41610	Do not reject
	2	40	0.92163	0.40730	Do not reject
	3	30	0.43934	0.72700	Do not reject

Notes: The hypothesis would be rejected if the probability is p < 0.05 (5% level) or p < 0.10 (10% level).

^aThe arrow (↛) within the first column points to the direction of causality.

^bObservations after lag.

*Significant at 10% level.

**Significant at 5% level.

***Significant at 1% level.

Table 5: Dynamic panel data estimates of the link between SADC exports to the world and BRIC FDI

Variable	Dependent variable:		Dependent variable:
	Coefficient	t-value	Coefficient	t-value
	−0.137	−0.99	–	–
	0.383**	2.65	–	–
	0.211**	2.31	–	–
	–	–	−0.244**	−2.67
	–	–	0.340**	2.64
	–	–	0.492***	3.74
Year	−1.248**	−2.30	0.489	0.72
Constant	2498.190**	2.29	−986.777	−0.73
Long-run coefficient	–	–	0.699***	6.55
Number of observations	104		104
Wald test (p-value)	0.000		0.000
AR 1 test (p-value)	0.015		0.007
AR 2 test (p-value)	0.061		0.067
Sargan test of over-identifying restrictions	0.315		0.207
Difference-in-Sargan tests	0.920		0.999

Notes: The table gives the results of (one-step) system GMM estimators. t-values are robust to heteroskedasticity and are corrected for small sample bias using Windmeijer's correction.

*Significance at the 10% level.

**Significance at the 5% level.

***Significance at the 1% level.

Table 6: Dynamic panel data estimates of the link between SADC exports to BRIC and BRIC FDI

Variable	Dependent variable:		Dependent variable:
	Coefficient	t-value	Coefficient	t-value
	−0.235	−1.41	–	–
	0.486***	4.77	–	–
	0.238	1.64	–	–
	–	–	−0.490***	−3.70
	–	–	0.370**	1.93
	–	–	0.220	1.73
Year	−0.309	−0.40	−0.353	−0.44
Constant	615.687	0.40	704.486	0.43
Long-run coefficient	–	–	0.724***	4.59
Number of observations	104		104
Wald test (p-value)	0.000		0.000
AR 1 test (p-value)	0.014		0.025
AR 2 test (p-value)	0.068		0.095
Sargan test of over-identifying restrictions	0.017		0.005
Difference-in-Sargan tests	0.793		0.975

Notes: The table gives the results of (one-step) system GMM estimators. t-values are robust to heteroskedasticity and are corrected for small sample bias using Windmeijer's correction.

*Significance at the 10% level.

**Significance at the 5% level.

***Significance at the 1% level.

ITC (International Trade Centre), 2012. Trademap. Trade statistics for international business development. http://www.trademap.org/Bilateral_TS.aspx Accessed March – December 2012.

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Zephyr, 2012. Zephyr: comprehensive M&A data with integrated detailed company information. https://zephyr2.bvdep.com/version-2012628/Home.serv?product=zephyrneo Accessed 29 July 2012.

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FDImarkets®, 2012. FDImarkets®: Crossborder investment monitor. http://www.fdimarkets.com/ Accessed 29 July 2012.

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