How to Increase the Growth Rate in South Africa?
AbstractGiven the concern about the low growth rates in African countries, this paper deals with the issue of how to increase the said growth rates by using South Africa as a case study. This paper attempts to answer this question by examining the determinants of total factor productivity (TFP) and productivity growth. We utilise the theoretical insights from the Solow (1956) growth model and its extension by Mankiw, Romer and Weil (1992). Our empirical methodology is based on the London School of Economics Hendry’s General to Specific Instrumental Variable method and Gregory and Hansen’s (1996a; 1996b) structural break technique. Our findings imply that variables like human capital, trade openness, foreign direct investment, financial efficiency, democracy and financial reforms improves TFP and productivity growth in South Africa. Importantly, the key determinants appear to be democracy and financial liberalisation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Economics and Econometrics Research Institute (EERI), Brussels in its series EERI Research Paper Series with number EERI_RP_2010_31.
Date of creation: 11 Oct 2010
Date of revision:
Solow model; total factor productivity; productivity growth.;
Other versions of this item:
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-30 (All new papers)
- NEP-DEV-2010-10-30 (Development)
- NEP-FDG-2010-10-30 (Financial Development & Growth)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Caselli, Francesco, 2004.
"Accounting for Cross-Country Income Differences,"
CEPR Discussion Papers
4703, C.E.P.R. Discussion Papers.
- N. Gregory Mankiw & David Romer & David N. Weil, 1992.
"A Contribution to the Empirics of Economic Growth,"
NBER Working Papers
3541, National Bureau of Economic Research, Inc.
- Robert J. Barro, 1991.
"Economic Growth in a Cross Section of Countries,"
NBER Working Papers
3120, National Bureau of Economic Research, Inc.
- Gregory, Allan W & Hansen, Bruce E, 1996.
"Tests for Cointegration in Models with Regime and Trend Shifts,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 58(3), pages 555-60, August.
- Tom Doan, . "GREGORYHANSEN: RATS procedure to implement Gregory-Hansen test for Cointegration with breaks," Statistical Software Components RTS00082, Boston College Department of Economics.
- Aghion, Philippe & Braun, Matias & Fedderke, Johannes, 2008.
"Competition and Productivity Growth in South Africa,"
3350068, Harvard University Department of Economics.
- Philippe Aghion & Matias Braun & Johannes Fedderke, 2008. "Competition and productivity growth in South Africa," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 741-768, October.
- Philippe Aghion & Matias Braun & Johannes Fedderke, 2007. "Competition and Productivity Growth in South Africa," Working Papers 54, Economic Research Southern Africa.
- Bjurek, Hans & Durevall, Dick, 1998. "Does Market Liberalization Increase Total Factor Productivity: Evidence from the Manufacturing Sector in Zimbabwe," Working Papers in Economics 10, University of Gothenburg, Department of Economics.
- William Easterly & Ross Levine & David Roodman, 2003. "New Data, New doubts: A Comment on Burnside and Dollar's "Aid, Policies, and Growth" (2000)," NBER Working Papers 9846, National Bureau of Economic Research, Inc.
- Hendry, David F & Doornik, Jurgen A, 1994. "Modelling Linear Dynamic Econometric Systems," Scottish Journal of Political Economy, Scottish Economic Society, vol. 41(1), pages 1-33, February.
- Luintel, Kul B. & Khan, Mosahid & Arestis, Philip & Theodoridis, Konstantinos, 2008.
"Financial structure and economic growth,"
Journal of Development Economics,
Elsevier, vol. 86(1), pages 181-200, April.
- Perron, Pierre, 1997.
"Further evidence on breaking trend functions in macroeconomic variables,"
Journal of Econometrics,
Elsevier, vol. 80(2), pages 355-385, October.
- Perron, P., 1990. "Further Evidence On Breaking Trend Functions In Macroeconomics Variables," Papers 350, Princeton, Department of Economics - Econometric Research Program.
- Perron, P., 1994. "Further Evidence on Breaking Trend Functions in Macroeconomic Variables," Cahiers de recherche 9421, Universite de Montreal, Departement de sciences economiques.
- Perron, P., 1994. "Further Evidence on Breaking Trend Functions in Macroeconomic Variables," Cahiers de recherche 9421, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Rao, B. Bhaskara, 2008.
"Estimates of the Steady State Growth Rates for Selected Asian Countries with an Extended Solow Model,"
9724, University Library of Munich, Germany, revised 01 Jul 2008.
- Rao, B. Bhaskara, 2010. "Estimates of the steady state growth rates for selected Asian countries with an extended Solow model," Economic Modelling, Elsevier, vol. 27(1), pages 46-53, January.
- B. Bhaskara Rao & Rup Singh & Saten Kumar, 2010.
"Do we need time series econometrics?,"
Applied Economics Letters,
Taylor and Francis Journals, vol. 17(7), pages 695-697.
- Rao, B. Bhaskara & Singh, Rup & Kumar, Saten, 2008. "Do we need time series econometrics?," MPRA Paper 6627, University Library of Munich, Germany.
- Rao, B. Bhaskara & Singh, Rup & Kumar, Saten, 2008. "Do we need time series econometrics," MPRA Paper 10530, University Library of Munich, Germany, revised 14 Sep 2008.
- Vivek B. Arora & Ashok Bhundia, 2003. "Potential Output and Total Factor Productivity Growth in Post-Apartheid South Africa," IMF Working Papers 03/178, International Monetary Fund.
- Emmanuel Brou Aka & Bernardin Akitoby & Amor Tahari & Dhaneshwar Ghura, 2004. "Sources of Growth in Sub-Saharan Africa," IMF Working Papers 04/176, International Monetary Fund.
- Charlotte DU Toit & Elna Moolman, 2003. "Estimating Potential Output And Capacity Utilisation For The South African Economy," South African Journal of Economics, Economic Society of South Africa, vol. 71(1), pages 96-118, 03.
- Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
- B. Bhaskara Rao & Maheshwar Rao, 2009. "Openness and growth in Fiji: some time series evidence," Applied Economics, Taylor & Francis Journals, vol. 41(13), pages 1653-1662.
- Lumengo Bonga-bonga, 2009. "The South African Aggregate Production Function: Estimation Of The Constant Elasticity Of Substitution Function," South African Journal of Economics, Economic Society of South Africa, vol. 77(2), pages 332-349, 06.
- Stock, James H & Watson, Mark W, 1993.
"A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems,"
Econometric Society, vol. 61(4), pages 783-820, July.
- Tom Doan, . "SWDOLS: RATS procedure to estimate cointegrating vectors using dynamic OLS," Statistical Software Components RTS00207, Boston College Department of Economics.
- James H. Stock & Mark W. Watson, 1991. "A simple estimator of cointegrating vectors in higher order integrated systems," Working Paper Series, Macroeconomic Issues 91-3, Federal Reserve Bank of Chicago.
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
- B. Bhaskara Rao & Gazi Hassan, 2011. "Determinants of the long-run growth rate of Bangladesh," Applied Economics Letters, Taylor and Francis Journals, vol. 18(7), pages 655-658.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julia van Hove).
If references are entirely missing, you can add them using this form.