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The Export-Output Relationship in South Africa: An Empirical Investigation

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  • Paul Cipamba Wa Cipamba
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    Abstract

    This 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 –driven export hypothesizes in the case of South Africa. The main policy implication of these results is that a speedy and sound execution of government’s plans aimed at stimulating and diversifying production for export will contribute to the improvement of growth and employment prospects.

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    File URL: http://www.econrsa.org/node/727
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    Bibliographic Info

    Paper provided by Economic Research Southern Africa in its series Working Papers with number 355.

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    Length: 20 pages
    Date of creation: 2013
    Date of revision:
    Handle: RePEc:rza:wpaper:355

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    Keywords: Export-led growth; Granger causality; South Africa;

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