An analysis of the relationship between exports and economic growth in South Africa, 2000-2020

The main purpose of the study is to explore the impact that exports have on the overall economic growth in South Africa. Quarterly time series data acquired from StatsSA and the South African Reserve Bank was used in the analyses for the period 2000-2021. The econometrics methods, such as the unit root test, Johansen’s cointegration procedure, the Vector Error Correction Model and the Granger causality model were used to give a clear understanding of how exports impact the South African economic growth rate. The Johansen cointegration test confirmed the existence of a long-run equilibrium relationship among the data series, which paved a way for the relationship between exports and economic growth to be examined using the Vector Error Correction Model (VECM). The unit root test showed that both variables passed levels are became stationary at the first difference using both ADF and PP tests. There is a positive correlation between exports and economic growth in both the short run and long run. The Granger causality tests results shows that GDP does granger cause exports, implying that GDP in South Africa influences exports. Furthermore, the VECM results proved that there is a short run and long run relationship between exports and economic growth in South Africa. The results of this study confirms the existence of a positive relationship between exports and economic growth in South Africa and the impact these variables have on each other.