The Export-Output Relationship in South Africa: An Empirical Investigation
AbstractThis study re-investigates the empirical relationship between exports and economic growth in South Africa using econometric techniques of co-integration and Granger causality over the period 1970Q1-2012Q4. The Johansen approach of co-integration shows that exports and GDP evolved together overtime, though deviations from the steady state might happen in the short-run. Furthermore, Granger causality based on a Vector Error Correction model (VECM) reveals the existence of short and long run bi-directional causality between export and GDP growth. Similarly, Granger causality based on an augmented vector auto-regression (VAR) model confirms that export Granger causes GDP and vice versa. Overall, the empirical findings of this study support the validity of export-led growth and growth â€“driven export hypothesizes in the case of South Africa. The main policy implication of these results is that a speedy and sound execution of governmentâ€™s plans aimed at stimulating and diversifying production for export will contribute to the improvement of growth and employment prospects.
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Bibliographic InfoPaper provided by Economic Research Southern Africa in its series Working Papers with number 355.
Length: 20 pages
Date of creation: 2013
Date of revision:
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Export-led growth; Granger causality; South Africa;
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