The Effects of Globalization and Foreign Direct Investment on the Economic Growth of South Africa

Developed and developing economies use globalization and foreign direct investment (FDI) to pave the way and to maximize economic growth. This study aims to investigate the impact of globalization and FDI on the economic growth of South Africa over the period from 1998 to 2022. The study employed the autoregressive distributed lag (ARDL) approach on annual data from the World Bank and the KOF index of globalization. ARDL tests reveal a long-run positive and statistically significant relationship of 12.7% in the case of economic globalization. This indicates that there is a reasonable level of the emergence of a globalized economy to integrate new and diverse systems, within internal economic growth forces that are supporting the globalization and endogenous growth theories. Political globalization is negative and statistically significant, while social globalization is positive but is used to depress long-run economic growth because of its insignificant status. The novelty of this study is to focus on the impacts of economic, social, and political globalization and FDI on the economic growth of South Africa, through direct and interactive procedures. The findings can be used by South African policymakers and other countries to prioritize reaping the benefits of globalization. These outcomes can be used to sensitize and promote policies that can attract relevant FDI, while enhancing economic growth.