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Exchange rate and manufacturing sector performance in SACU states

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  • Courage Mlambo

Abstract

This study sought to examine the impact of the exchange rate on manufacturing performance in SACU states. The manufacturing sector is an avenue for trade expansion and it is a vital source of innovation and competitiveness and it makes outsized contributions to exports and productivity growth. Manufacturing in SACU countries is hampered by structural shortcomings such as the exchange rate and other factors. Given this background, the study employed the panel group FMOLS and PMG approaches for the period 1995–2016. Results showed that the exchange rate, imports and FDI have a negative relationship with manufacturing performance. Exports and inflation had a positive relationship with manufacturing performance. Based on the findings of the study, it is recommended that SACU countries need to formulate informed policies that align the exchange rate to the actual needs of the manufacturing sector. Policymakers need to know which subsectors of the manufacturing sector will be affected by an exchange rate change and they also need to know the magnitude of the impact so that they can make informed decisions.

Suggested Citation

  • Courage Mlambo, 2020. "Exchange rate and manufacturing sector performance in SACU states," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1787735-178, January.
    • Handle: RePEc:taf:oabmxx:v:7:y:2020:i:1:p:1787735
    DOI: 10.1080/23311975.2020.1787735
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    Cited by:

    1. Eunice Jonathan Lugina & Adam Beni Swebe Mwakalobo & Francis Lwesya, 2022. "Effects of industrialization on Tanzania’s economic growth: a case of manufacturing sector," Future Business Journal, Springer, vol. 8(1), pages 1-11, December.
    2. Wabei Catherine Mutafu, 2023. "Evaluation of the Impact of the Lusaka Stock Exchange on the Financial Performance of Telecommunication Companies in Zambia: A Study of Airtel Zambia Limited (2012 – 2021)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(6), pages 494-508, June.

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