Acta Universitatis Danubius. Œconomica, Vol 13, No 4 (2017)

Abstract

South Africa's reserve played a vital economic defence role during the economic crises of the recent past. however little research has examined the relationship between export value and the reserve of South Africa. This paper contributes by assessing the impact of four independent variables (export value, government effectiveness, foreign direct investment and GDP) on the reserve of South Africa. Data were from the World Bank Archives of Global Financial Indicators and from the World Bank Archives of Governance Indicators covering from 1996 to 2014. A cointegration and the OLS regression tests showed a long run relationship between export value, government effectiveness, foreign direct investment and the reserve of South Africa. The Granger Causality test revealed that foreign reserve may influence export value (unidirectional), and that reserve may enhance government effectiveness. The paper offers policy recommendations that may improve the level of reserve and provides an agenda for further research.