**2.1 Mining production and sales**

The South African mining sector has contributed positively to the country's economy, specifically impacting the increase in employment and GDP through trade. The mining industry has played an important role in the contribution to civilization and human existence [10]. Mining is considered to be the second earliest human endeavour, while agriculture is considered the first. To date, these two industries have continued to play an important role in the economy since the beginning of civilization [10]. Mining is not and has not always been the only major contributor to the economy as the manufacturing industry was considered to be the largest in the year 1980, making the mining industry the second largest industry, followed by agriculture [3].

and forms and the substantial number of providers, merchants and directs engaged

small, medium and microenterprises (SMMEs) in specialty markets [16].

it provides investors with real-time movement of the stock market.

As indicated by the arrangement of monetary exercises in South Africa, the food and beverage sector incorporates the assembling of sustenance items and refreshments, be that as it may, as opposed to the training in most different nations, it prohibits the tobacco-producing area, which is incorporated in the rural division. As indicated by [15], the food and beverage sector is critical in South Africa on account of its high level of forward and in reverse linkages with different enterprises, which enables it to assume an imperative part in quickening monetary action. The food and beverages sector is suited to South Africa's creating nation qualities because handling plants are not generally scale-reliant and little operations might be as monetarily productive as bigger plants, subsequently promising the cooperation of

Stock prices are share prices of several numbers of saleable stock of a company. Stock prices are sold and bought to improve the credibility of a company so that investors can come into the company and invest. In addition, selling stock helps the company grow. An empirical study that was done by [17] says that the stock price index is an indicator for reference issued by the financial service institutions that show change in the stock market. The researcher continues to say that it mainly denotes the general trend of stock price and the change range for the market so that

In 1970 (the first year for which FDI information was accessible), the aggregate

sum of FDI inflows in Africa was \$1.26 billion, and it rose to \$55.04 billion in 40 years. This means that from 1970 to 2010, FDI inflows expanded by 4.268% which is a commendable achievement. Nonetheless, for a decent appraisal of the circumstance, it is smarter to put Africa's achievement into a relative point of view. The picture painted here is extraordinary. In 1970, Africa's offer in the worldwide FDI inflows was 9.5% dropping to 4.4% 40 years later. Similarly, the offer of Africa in building up the nation's FDI inflows was 32.8% in 1970, dropping to 9.6% 40 years later. As per information from the [18] World Bank's 2014 World Development Indicators, Africa's normal net official development assistance as a level of gross national salary decreased from 5.3% in 2005 to 4.2% 3 years later and later decayed to 3.3% in 2012. Africa and other developing regions are probably going to keep accepting less ODA, because of monetary challenges, which restrain numerous Western benefactor nations to give improvement help to developing nations. Africa gets less ODA, while its requirement for advancement financings stays very large. In reality, it has been evaluated that about \$186 billion will be required every year to back Africa's post-2015 advancement motivation [19]. Accordingly, Africa needs to discover elective assets for financing its improvement, and FDI is an essential alternative. The uplifting news for Africa is that, over the previous years, the continent has been one of the quickest developing regions on the planet, which makes it one of the potential outskirt markets. This builds financial specialists' interests in Africa. On the other hand, FDI streams will not consequently appear, and efforts should be made to change the potential into real FDI streams to Africa. [20] emphasize that literature suggests the emergence of policy and non-policy factors as determinants of FDI. The non-policy factors in determining the determinants of FDI would include market size, distance factor proportions and political

with taking the items to business sectors.

*DOI: http://dx.doi.org/10.5772/intechopen.87186*

*Trade and Investment in South Africa*

**2.4 The banks' stock prices**

**2.5 Foreign direct investments**

**17**

Mining practices in South Africa began about 165 years ago. It started with the discovery of diamond followed by that of gold a few years later. These two discoveries played a significant role in the growth of the South African economy. According to [2], the 1970s are best remembered as the decade in which the South African mining sector greatly influenced the economy and employment. The contribution to the economic production reached its peak in the year 1980, and in 1987 the mining industry employed more than 760,000 individuals [2].

#### **2.2 Retail sales**

Retail sales are sales of finished goods and services sold to either consumers or businesses. Fluctuations in retail sales are a matter of concern for businessmen and businesswomen, investors and policymakers [11].

According to [12], aggregate retail sales are a summative measure of sales of retail goods over a stated period of time, typically grounded on a data sampling that is extrapolated to model the entire retail sales of a country. Evaluating consumer demands for finished goods, aggregate retail sales help measure the pulse of an economy and its estimated path towards growth [12]. Similarly, to other various economic time series, South Africa's aggregate retail sales have a strong trend and seasonal patterns. Modelling and forecasting these patterns have been a longstanding issue in time series.

According to [13], several years ago, worldwide, participants (buyers and sellers) were individual retail investors and institutions such as banks, insurance companies and hedge funds and also publicly traded corporations trading in their own shares. Investors such as wealthy businessmen were market participants. Previously, markets became more "institutionalized". Buyers and sellers were institutions such as insurance companies, mutual funds, index funds, investor groups, banks and various other financial institutions.

Presently, participants in the stock market array from small individual stock investors to large hedge fund trader. Their orders regularly end up with a professional at the stock exchange, who completes the order. Most stocks are traded at the exchanges, for example, the Johannesburg Stock Exchange (JSE), which are places where participants decide on a price. The key objective of a stock exchange is to simplify the exchange of securities between participants, thus providing a marketplace.

#### **2.3 Food and beverage sales**

The food and beverage sector is a critical sector of the South African economy, as indicated by [14]. It represents 18% of assembling deals (sustenance (13.5%) and drinks (4.4%)) and 17% of gross esteem including the assembling segment and utilizes around 230,000 workers in 2009 [3]. The area is a piece of the nourishment business esteem chain, which comprises of cultivating and the generation of crude farming produce; preparing of crude horticultural wares; fabricating, changing the crude and handled delivery into completed or prepared wares; wholesalers and retailers of the completed items; and buyers.

The South African food and beverage sector concentrates on the third connection in the chain beneath and changes through mechanical procedures and agrarian wares into semi-handled or completely prepared nourishment fixings or items. In spite of the fact that there are up- and downstream interdependencies, the nourishment and drinks fabricating part contrasts from the essential horticulture segment through its unpredictability, utilization of capital-concentrated innovation

### *Trade and Investment in South Africa DOI: http://dx.doi.org/10.5772/intechopen.87186*

largest in the year 1980, making the mining industry the second largest industry,

eries played a significant role in the growth of the South African economy.

the mining industry employed more than 760,000 individuals [2].

businesswomen, investors and policymakers [11].

banks and various other financial institutions.

retailers of the completed items; and buyers.

securities between participants, thus providing a marketplace.

Mining practices in South Africa began about 165 years ago. It started with the discovery of diamond followed by that of gold a few years later. These two discov-

According to [2], the 1970s are best remembered as the decade in which the South African mining sector greatly influenced the economy and employment. The contribution to the economic production reached its peak in the year 1980, and in 1987

Retail sales are sales of finished goods and services sold to either consumers or businesses. Fluctuations in retail sales are a matter of concern for businessmen and

According to [12], aggregate retail sales are a summative measure of sales of retail goods over a stated period of time, typically grounded on a data sampling that is extrapolated to model the entire retail sales of a country. Evaluating consumer demands for finished goods, aggregate retail sales help measure the pulse of an economy and its estimated path towards growth [12]. Similarly, to other various economic time series, South Africa's aggregate retail sales have a strong trend and seasonal patterns. Modelling and forecasting these patterns have been a long-

According to [13], several years ago, worldwide, participants (buyers and sellers) were individual retail investors and institutions such as banks, insurance companies and hedge funds and also publicly traded corporations trading in their own shares. Investors such as wealthy businessmen were market participants. Previously, markets became more "institutionalized". Buyers and sellers were institutions such as insurance companies, mutual funds, index funds, investor groups,

Presently, participants in the stock market array from small individual stock investors to large hedge fund trader. Their orders regularly end up with a professional at the stock exchange, who completes the order. Most stocks are traded at the exchanges, for example, the Johannesburg Stock Exchange (JSE), which are places where participants decide on a price. The key objective of a stock exchange is to simplify the exchange of

The food and beverage sector is a critical sector of the South African economy, as indicated by [14]. It represents 18% of assembling deals (sustenance (13.5%) and drinks (4.4%)) and 17% of gross esteem including the assembling segment and utilizes around 230,000 workers in 2009 [3]. The area is a piece of the nourishment business esteem chain, which comprises of cultivating and the generation of crude farming produce; preparing of crude horticultural wares; fabricating, changing the crude and handled delivery into completed or prepared wares; wholesalers and

The South African food and beverage sector concentrates on the third connection in the chain beneath and changes through mechanical procedures and agrarian wares into semi-handled or completely prepared nourishment fixings or items. In spite of the fact that there are up- and downstream interdependencies, the nourishment and drinks fabricating part contrasts from the essential horticulture segment through its unpredictability, utilization of capital-concentrated innovation

followed by agriculture [3].

*Regional Development in Africa*

standing issue in time series.

**2.3 Food and beverage sales**

**16**

**2.2 Retail sales**

and forms and the substantial number of providers, merchants and directs engaged with taking the items to business sectors.

As indicated by the arrangement of monetary exercises in South Africa, the food and beverage sector incorporates the assembling of sustenance items and refreshments, be that as it may, as opposed to the training in most different nations, it prohibits the tobacco-producing area, which is incorporated in the rural division. As indicated by [15], the food and beverage sector is critical in South Africa on account of its high level of forward and in reverse linkages with different enterprises, which enables it to assume an imperative part in quickening monetary action. The food and beverages sector is suited to South Africa's creating nation qualities because handling plants are not generally scale-reliant and little operations might be as monetarily productive as bigger plants, subsequently promising the cooperation of small, medium and microenterprises (SMMEs) in specialty markets [16].

## **2.4 The banks' stock prices**

Stock prices are share prices of several numbers of saleable stock of a company. Stock prices are sold and bought to improve the credibility of a company so that investors can come into the company and invest. In addition, selling stock helps the company grow. An empirical study that was done by [17] says that the stock price index is an indicator for reference issued by the financial service institutions that show change in the stock market. The researcher continues to say that it mainly denotes the general trend of stock price and the change range for the market so that it provides investors with real-time movement of the stock market.

### **2.5 Foreign direct investments**

In 1970 (the first year for which FDI information was accessible), the aggregate sum of FDI inflows in Africa was \$1.26 billion, and it rose to \$55.04 billion in 40 years. This means that from 1970 to 2010, FDI inflows expanded by 4.268% which is a commendable achievement. Nonetheless, for a decent appraisal of the circumstance, it is smarter to put Africa's achievement into a relative point of view. The picture painted here is extraordinary. In 1970, Africa's offer in the worldwide FDI inflows was 9.5% dropping to 4.4% 40 years later. Similarly, the offer of Africa in building up the nation's FDI inflows was 32.8% in 1970, dropping to 9.6% 40 years later. As per information from the [18] World Bank's 2014 World Development Indicators, Africa's normal net official development assistance as a level of gross national salary decreased from 5.3% in 2005 to 4.2% 3 years later and later decayed to 3.3% in 2012. Africa and other developing regions are probably going to keep accepting less ODA, because of monetary challenges, which restrain numerous Western benefactor nations to give improvement help to developing nations. Africa gets less ODA, while its requirement for advancement financings stays very large. In reality, it has been evaluated that about \$186 billion will be required every year to back Africa's post-2015 advancement motivation [19]. Accordingly, Africa needs to discover elective assets for financing its improvement, and FDI is an essential alternative. The uplifting news for Africa is that, over the previous years, the continent has been one of the quickest developing regions on the planet, which makes it one of the potential outskirt markets. This builds financial specialists' interests in Africa. On the other hand, FDI streams will not consequently appear, and efforts should be made to change the potential into real FDI streams to Africa. [20] emphasize that literature suggests the emergence of policy and non-policy factors as determinants of FDI. The non-policy factors in determining the determinants of FDI would include market size, distance factor proportions and political

and monetary dependability. The policy factors in determining the determinants of FDI would include openness to trade, product market regulation, labour market arrangements, corporate tax rates and infrastructural developments [20].

**3.1 Model specification**

*Trade and Investment in South Africa*

*DOI: http://dx.doi.org/10.5772/intechopen.87186*

where

**4.1 Results**

mum of four lags.

**Figure 1.** *Exchange rate.*

**19**

and exchange rate being independent variables.

*FDIQ* ¼ foreign direct investment in quarter *Q EXRATEQ* = exchange rate in quarter *Q*

nonstationary and stationary processes look like.

This can be written as follows:

*OILQ* = oil price in quarter *Q*

**4. Analysis and findings**

The model below will be generated by FDI being the dependent variable and oil

(1)

*FDIQ* ¼ *f EXRATEQ ; OILQ*

A stationery time series is defined as a series with constant mean, constant variance and constant auto-variance for each lag. A unit root test examines whether the time series variables are nonstationary. If there are unit roots (nonstationary) in the series, a series of successive differences can change it into a stationary one. **Figures 1** and **2** depict the exchange rate processes. This is to show how

After differencing, there exists a stationary linear combination of nonstationary random variables; the variables combined are said to be cointegrated. When two or

cointegrated. The ADF test was used to investigate the order of integration. This test is important in determining whether cointegration methods can be applied to study the long-run relationship between the variables. The variables in this study are integrated to the same order. In order to examine the impact of oil price and the exchange rate on FDI, the VAR model was used. A selection is done using a maxi-

more variables move together for a long period of time, we say they are