IDEAS home Printed from https://ideas.repec.org/a/kap/ecopln/v54y2021i2d10.1007_s10644-020-09285-6.html
   My bibliography  Save this article

The asymmetric effect of trade openness on economic growth in South Africa: a nonlinear ARDL approach

Author

Listed:
  • Maxwell Chukwudi Udeagha

    (University of Johannesburg)

  • Nicholas Ngepah

    (University of Johannesburg)

Abstract

The untested hypothesis of a linear association between trade openness and economic growth in earlier studies may bring about incorrect inferences if indeed the association is nonlinear. This study uses the newly developed nonlinear autoregressive distributed lags (NARDL) framework to re-examine the link between trade openness and economic growth in South Africa over the period 1960–2016, highlighting the asymmetric effects of trade openness using an innovative proxy of trade openness proposed by Squalli and Wilson (World Econ 34(10):1745–1770, 2011). In contrast to previous studies, the new proxy is constructed to take into consideration both South Africa’s trade share of its GDP and its relative size of trade in relation to world trade in a specified period. Adopting this novel approach to capture openness permits the simultaneous testing of short- and long-run nonlinearities through positive and negative partial sum decompositions of trade openness. It also enables us to quantify the short- and long-run impacts of trade openness increases and decreases on economic growth from asymmetric dynamic multipliers. The results show that trade openness has short- and long-run asymmetric effects on economic growth. These results have important policy implications.

Suggested Citation

  • Maxwell Chukwudi Udeagha & Nicholas Ngepah, 2021. "The asymmetric effect of trade openness on economic growth in South Africa: a nonlinear ARDL approach," Economic Change and Restructuring, Springer, vol. 54(2), pages 491-540, May.
    • Handle: RePEc:kap:ecopln:v:54:y:2021:i:2:d:10.1007_s10644-020-09285-6
    DOI: 10.1007/s10644-020-09285-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10644-020-09285-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10644-020-09285-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mohsen Bahmani-Oskooee & Nazif Durmaz, 2016. "Exchange rate volatility and Turkish commodity trade with the rest of the world," Economic Change and Restructuring, Springer, vol. 49(1), pages 1-21, February.
    2. Apergis, Nicholas & Miller, Stephen M., 2006. "Consumption asymmetry and the stock market: Empirical evidence," Economics Letters, Elsevier, vol. 93(3), pages 337-342, December.
    3. Emre Atilgan & Dilek Kilic & Hasan Murat Ertugrul, 2017. "The dynamic relationship between health expenditure and economic growth: is the health-led growth hypothesis valid for Turkey?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(5), pages 567-574, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mohsen Bahmani‐Oskooee & Jungho Baek, 2020. "On the asymmetric effects of the real exchange rate on domestic investment in G7 countries," Australian Economic Papers, Wiley Blackwell, vol. 59(4), pages 303-318, December.
    2. Mohsen Bahmani-Oskooee & Ahmed Usman & Sana Ullah, 2023. "Asymmetric Impact of Exchange Rate Volatility on Commodity Trade Between Pakistan and China," Global Business Review, International Management Institute, vol. 24(3), pages 510-534, June.
    3. Mohsen Bahmani‐Oskooee & Mehrnoosh Hasanzade, 2022. "Policy uncertainty and income distribution: Asymmetric evidence from state‐level data in the United States," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 179-220, January.
    4. Chen, Nan-Kuang & Chen, Shiu-Sheng & Chou, Yu-Hsi, 2010. "House prices, collateral constraint, and the asymmetric effect on consumption," Journal of Housing Economics, Elsevier, vol. 19(1), pages 26-37, March.
    5. Deniz GÜVEN & Türker ŞİMŞEK & Ahmet GÜVEN, 2018. "Sağlık Yönetimi Kapsamında Sağlık Harcamalarının Ekonomik Büyüme Üzerine Etkisi: MENA Ülkeleri Üzerine Bir Panel Regresyon Analizi," Sosyoekonomi Journal, Sosyoekonomi Society, issue 26(37).
    6. Bahmani-Oskooee, Mohsen & Motavallizadeh-Ardakani, Amid, 2017. "On the value of the dollar and income inequality: Asymmetric evidence from state level data in the U.S," The Journal of Economic Asymmetries, Elsevier, vol. 16(C), pages 64-78.
    7. Paradiso, Antonio & Casadio, Paolo & Rao, B. Bhaskara, 2012. "US inflation and consumption: A long-term perspective with a level shift," Economic Modelling, Elsevier, vol. 29(5), pages 1837-1849.
    8. Mohsen Bahmani-Oskooee & Sahar Bahmani, 2015. "Nonlinear ARDL Approach and the Demand for Money in Iran," Economics Bulletin, AccessEcon, vol. 35(1), pages 381-391.
    9. Mohsen Bahmani-Oskooee & Majid Maki Nayeri, 2020. "Policy uncertainty and consumption in G7 countries: An asymmetry analysis," International Economics, CEPII research center, issue 163, pages 101-113.
    10. Mehmet Balcilar & Evrim Toren, 2021. "The Time-Varying Effect of Asset Prices on Turkey’s Circular Economy," Sustainability, MDPI, vol. 13(22), pages 1-16, November.
    11. Gupta, Rangan & Modise, Mampho P., 2012. "South African stock return predictability in the context data mining: The role of financial variables and international stock returns," Economic Modelling, Elsevier, vol. 29(3), pages 908-916.
    12. Mohsen Bahmani-oskooee & Hadise Fariditavana, 2014. "Do Exchange Rate Changes have Symmetric Effect on the S-Curve?," Economics Bulletin, AccessEcon, vol. 34(1), pages 164-173.
    13. Bahmani-Oskooee, Mohsen & Ghodsi, Seyed Hesam & Hadzic, Muris, 2020. "Asymmetric causality between stock returns and usual hedges: An industry-level analysis," The Journal of Economic Asymmetries, Elsevier, vol. 21(C).
    14. Sinan Erdogan & Eyup Serdar Erdogan, 2023. "Analyzing the asymmetric effect of disaggregated health expenditures on economic growth," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(3), pages 2673-2686, June.
    15. Goodness C. Aye & Rangan Gupta & Mampho P. Modise, 2015. "Do Stock Prices Impact Consumption and Interest Rate in South Africa? Evidence from a Time-varying Vector Autoregressive Model," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 14(2), pages 176-196, August.
    16. Mohsen Bahmani-Oskooee & Dan Xi & Sahar Bahmani, 2016. "Asymmetric effects of exchange rate changes on the demand for money in China," Applied Economics Letters, Taylor & Francis Journals, vol. 23(15), pages 1104-1109, October.
    17. Mohsen Bahmani-Oskooee & Tatchawan Kanitpong, 2017. "Do exchange rate changes have symmetric or asymmetric effects on the trade balances of Asian countries?," Applied Economics, Taylor & Francis Journals, vol. 49(46), pages 4668-4678, October.
    18. Xiaoxuan Yang, 2020. "Health expenditure, human capital, and economic growth: an empirical study of developing countries," International Journal of Health Economics and Management, Springer, vol. 20(2), pages 163-176, June.
    19. Mauro Mastrogiacomo, 2006. "Testing consumers' asymmetric reaction to wealth changes," CPB Discussion Paper 53, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Mohsen Bahmani-Oskooee & Jungho Baek, 2021. "Exchange rate volatility and domestic investment in G7: are the effects asymmetric?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(3), pages 775-799, August.

    More about this item

    Keywords

    International trade; Nonlinear ARDL; Trade openness; Economic growth; Symmetric ARDL; Asymmetry cointegration; South Africa;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:ecopln:v:54:y:2021:i:2:d:10.1007_s10644-020-09285-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.