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The Export-Output Relationship in South Africa: An Empirical Investigation

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  • Paul Cipamba Wa Cipamba

Abstract

This study re-investigates the empirical relationship between exports and economic growth in South Africa using econometric techniques of co-integration and Granger causality over the period 1970Q1-2012Q4. The Johansen approach of co-integration shows that exports and GDP evolved together overtime, though deviations from the steady state might happen in the short-run. Furthermore, Granger causality based on a Vector Error Correction model (VECM) reveals the existence of short and long run bi-directional causality between export and GDP growth. Similarly, Granger causality based on an augmented vector auto-regression (VAR) model confirms that export Granger causes GDP and vice versa. Overall, the empirical findings of this study support the validity of export-led growth and growth –driven export hypothesizes in the case of South Africa. The main policy implication of these results is that a speedy and sound execution of government’s plans aimed at stimulating and diversifying production for export will contribute to the improvement of growth and employment prospects.

Suggested Citation

  • Paul Cipamba Wa Cipamba, 2013. "The Export-Output Relationship in South Africa: An Empirical Investigation," Working Papers 355, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:355
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    File URL: http://www.econrsa.org/node/727
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    Keywords

    Export-led growth; Granger causality; South Africa;

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