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Factor Decomposition of Sectoral Growth in South Africa, 1970-2007

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  • Tregenna, F.

Abstract

Chenery’s factor decomposition method is used to analyse the sources of growth, by sector, in South Africa from 1970 to 2007. Using input-output data, the growth of each sector is decomposed into components associated with export growth; import substitution; growth in domestic demand; and growth in intermediate demand. The results highlight the dependence on domestic demand expansion as a source of growth in the period since 2000, especially for manufacturing. However, subsectors which relied exclusively or primarily on domestic demand expansion generally performed relatively poorly. The technological change component of growth is the only component with a consistently positive and statistically significant correlation with sectoral growth. The only two manufacturing subsectors for which all four components were positive in the period since 2000, were also the two fastest growing subsectors of the whole economy. The analysis also enables a typology of the subsectors of each of manufacturing and services, according to the relative importance of each of the four components.

Suggested Citation

  • Tregenna, F., 2009. "Factor Decomposition of Sectoral Growth in South Africa, 1970-2007," Cambridge Working Papers in Economics 0930, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:0930
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    Keywords

    growth; sectors; factor decomposition; South Africa;

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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