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Documenting major drivers of trends in trade balance for SADC region amid the full implementation of the African Continental Free Trade Area (AFCFTA)

Author

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  • Phillip Mogashwa

    (Department of Social Science Education and Economic Management Education, University of Limpopo, Polokwane, South Africa)

  • Sehludi Brian Molele

    (School of Economics and Management, University of Limpopo, Limpopo Province, South Africa)

Abstract

This study scrutinises drivers of trade performance in the SADC region amid the full implementation of the African Continental Free Trade Area (AfCFTA). Where the short and long-run impact, through the Autoregressive Distributive Lag (ARDL) and forecasts through IRF of external debt, debt service cost, GDP per capita, Foreign Direct Investment (FDI), and Terms of Trade (TOT) on the trade balance is interrogated. In the long run, external debt, debt service costs, and GDP per capita negatively influenced the trade balance. TOT was found to be an insignificant predictor. This implies that these variables were among the significant drivers of trade balance while the impact of terms of trade is negligible in the region. FDI positively impacts regional trade balance, which informs us that it acts as a stimulus for trade in the area. Short-run results revealed that external debt and GDP per capita affected trade balance positively, while debt service costs, FDI and TOT were found to have a negative impact. IRF results showed that shocks from external debt and per capita GDP pose a positive instant impact, while shocks from FDI and TOT were proven to worsen the trade balance in the region. The region needs an FDI stimulus. Key Words:Trade Balance; Macroeconomic Variables, SADC; AfCFTA; Panel ARDL

Suggested Citation

  • Phillip Mogashwa & Sehludi Brian Molele, 2023. "Documenting major drivers of trends in trade balance for SADC region amid the full implementation of the African Continental Free Trade Area (AFCFTA)," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(3), pages 286-296, April.
    • Handle: RePEc:rbs:ijbrss:v:12:y:2023:i:3:p:286-296
    DOI: 10.20525/ijrbs.v12i3.2292
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    References listed on IDEAS

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    1. Waithe, Kimberly & Lorde, Troy & Francis, Brian, 2010. "Export-led Growth: A Case Study of Mexico," MPRA Paper 95557, University Library of Munich, Germany.
    2. Robert J. Utz, 2007. "Sustaining and Sharing Economic Growth in Tanzania : Contents of CD Rom," World Bank Publications - Books, The World Bank Group, number 6894, April.
    3. Robert J. Utz, 2007. "Sustaining and Sharing Economic Growth in Tanzania," World Bank Publications - Books, The World Bank Group, number 6835, April.
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    Cited by:

    1. Nombeko Gumbo & Peter Nkala, 2023. "A qualitative meta-analysis of issues and challenges of trade facilitation in developing countries," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(6), pages 159-175, September.

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