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What drives long-run economic growth? Empirical evidence from South Africa

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  • Chirwa, Themba G
  • Odhiambo, Nicholas M

Abstract

In this study, we examine empirically the key determinants of economic growth in South Africa ?using the ARDL bounds-testing approach. The paper has been motivated by the low and dwindlingeconomic growth that South Africa has been experiencing in recent years. Our study finds that thekey macroeconomic determinants that are significantly associated with economic growth in SouthAfrica include, amongst others, investment, human capital development, population growth,government consumption, inflation, and international trade. The study finds that in the short run,investment is positively associated with economic growth, while population growth and governmentconsumption are negatively associated with economic growth. However, in the long run, the studyfinds investment, human capital development and international trade to be positively associatedwith economic growth, while population growth, government consumption, and inflation arenegatively associated with economic growth. These results have important policy implications.They imply that economic strategies pursued in the short run should include policies that attractinvestment, and reduce population growth and government consumption. However, long-runstrategies to be adopted should include those that attract long-term investments, improve thequality of education, as well as trade liberalization; and ensure a reduction in population growth,government consumption and inflation.

Suggested Citation

  • Chirwa, Themba G & Odhiambo, Nicholas M, 2016. "What drives long-run economic growth? Empirical evidence from South Africa," Working Papers 19975, University of South Africa, Department of Economics.
  • Handle: RePEc:uza:wpaper:19975
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    Cited by:

    1. Saungweme & Odhiambo, 2021. "Does Public Debt Granger-Cause Inflation in Tanzania? A Multivariate Analysis," Working Papers AERI0621, African Economic Research Institute (AERI).
    2. Nyasha Sheilla & Odhiambo Nicholas M., 2019. "The Impact of Public Expenditure on Economic Growth: A Review of International Literature," Folia Oeconomica Stetinensia, Sciendo, vol. 19(2), pages 81-101, December.
    3. Chirwa, Themba G & Odhiambo, Nicholas M., 2018. "The determinants of public debt in the Euro area: A panel ARDL approach," Working Papers 23509, University of South Africa, Department of Economics.
    4. Chirwa, Themba G & Odhiambo, Nicholas M., 2018. "Electricity consumption and economic growth: New evidence from twelve countries," Working Papers 23508, University of South Africa, Department of Economics.
    5. Leshoro, Temitope L A, 2017. "An empirical analysis of disaggregated government expenditure and economic growth in South Africa," Working Papers 22644, University of South Africa, Department of Economics.

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    More about this item

    Keywords

    Republic of South Africa; Autoregressive Distributed Lag Models; Economic Growth;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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