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Potential Output and total Factor Productivity Growth in Post-Apartheid South Africa

Author

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  • Vivek B. Arora
  • Ashok Bhundia

Abstract

This paper provides estimates of potential output growth in post-apartheid South Africa using both time trend techniques and a production function approach which indicates a potential growth rate of around 3 percent. The implied output gap provides statistically significant information for predicting inflation and could thus provide valuable input for formulating macroeconomic policy. Growth accounting and regression analysis suggest that an increase in trend GDP growth after the end of apartheid in 1994 is attributable to higher TFP growth driven by trade liberalization and greater private sector participation.

Suggested Citation

  • Vivek B. Arora & Ashok Bhundia, 2003. "Potential Output and total Factor Productivity Growth in Post-Apartheid South Africa," IMF Working Papers 03/178, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:03/178
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    References listed on IDEAS

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    3. Bankim Chadha, 1995. "Disequilibrium in the Labor Market in South Africa," IMF Staff Papers, Palgrave Macmillan, vol. 42(3), pages 642-669, September.
    4. By Gunnar Jonsson & Arvind Subramanian, 2001. "Dynamic Gains from Trade: Evidence from South Africa," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 1-8.
    5. G.L. Wet, 1995. "The Prognosis for Growth and Development in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 63(4), pages 263-270, December.
    6. Luis A. Rivera-Batiz & Paul M. Romer, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 531-555.
    7. P.D.F. Strydom, 1995. "International Trade and Economic Growth: The Opening-up of the South African Economy," South African Journal of Economics, Economic Society of South Africa, vol. 63(4), pages 306-316, December.
    8. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-149, January.
    9. Chantal Dupasquier & Alain Guay & Pierre St-Amant, 1997. "A Comparison of Alternative Methodologies for Estimating Potential Output and the Output Gap," Staff Working Papers 97-5, Bank of Canada.
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    Citations

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    Cited by:

    1. Chris Heerden & Riaan Rossouw, 2014. "Resource utilisation Efficiency: A South African Provincial Evaluation," South African Journal of Economics, Economic Society of South Africa, vol. 82(4), pages 475-492, December.
    2. Kumar, Saten & Pacheco, Gail & Rossouw, Stephanie, 2010. "How to Increase the Growth Rate in South Africa?," MPRA Paper 26105, University Library of Munich, Germany.
    3. Rulof P. Burger & Francis J. Teal, 2015. "The Effect of Schooling on Worker Productivity: Evidence from a South African Industry Panel," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 24(5), pages 629-644.
    4. Stan Du plessis & Ben Smit & Federico Sturzenegger, 2007. "The Cyclicality Of Monetary And Fiscal Policy In South Africa Since 1994," South African Journal of Economics, Economic Society of South Africa, vol. 75(3), pages 391-411, September.
    5. Torfinn Harding & Jørn Rattsø, 2005. "The Barrier Model of Productivity Growth: South Africa," Working Paper Series 4805, Department of Economics, Norwegian University of Science and Technology.
    6. Cheteni, Priviledge, 2013. "Transport Infrastructure Investment and Transport Sector Productivity on Economic Growth in South Africa (1975-2011)," MPRA Paper 53175, University Library of Munich, Germany, revised 18 Jul 2013.
    7. Luc Eyraud, 2009. "Why isn't South Africa Growing Faster? a Comparative Approach," IMF Working Papers 09/25, International Monetary Fund.
    8. Thurlow, James, 2006. "Has trade liberalization in South Africa affected men and women differently?:," DSGD discussion papers 36, International Food Policy Research Institute (IFPRI).
    9. Johannes Hermanus Kemp, 2015. "Measuring Potential Output for the South African Economy: Embedding Information About the Financial Cycle," South African Journal of Economics, Economic Society of South Africa, vol. 83(4), pages 549-568, December.
    10. Wolassa Lawisso Kumo, 2017. "Working Paper 263 - Factor Productivity and Potential Output Growth in South Africa," Working Paper Series 2374, African Development Bank.
    11. Jan A. Swanepoel, 2004. "The Monetary-Fiscal Policy Mix In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 72(4), pages 730-758, September.
    12. P. Burger & M. Marinkov, 2006. "The South African Phillips Curve: How Applicable Is The Gordon Model?," South African Journal of Economics, Economic Society of South Africa, vol. 74(2), pages 172-189, June.
    13. Edwards, Lawrence & Rankin, Neil A. & Schöer, Volker, 2008. "South African exporting firms: What do we know and what should we know?," MPRA Paper 16906, University Library of Munich, Germany.
    14. repec:bla:sajeco:v:85:y:2017:i:2:p:161-177 is not listed on IDEAS

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