IMPACT OF FLOATING EXCHANGE RATE ON THE OUTPUT, EXPORT AND EMPLOYMENT IN THE SOUTH AFRICAN BEEF INDUSTRY

Abstract

The purpose of the study is to analyse the impact of floating exchange rate through the long-run and short-run changes or dynamic relations amongst total production, Volume of exports and total employment from 1995 to 2020, using a time-series analysis. The study adopts the secondary time series data for total production, volume of exports and total employment. Descriptive statistics was adopted to describe the features of the data quantitatively and to profile the beef industry. Unit root test was performed for the integration of variables where data exabits mixture of level and first integration. Bound test shows that variables are somehow associated in the long run due to their short run cointegration. The results from the cointegration test and the ARDL-ECM estimation suggest a long-run effect among total production, volume of exports and total employment. The adjustment term or coefficient of ECT of dependent variables suggests that the past year’s errors are corrected for the current year at a convergence speed of 0.93, 1.72 and 1.06 percentage points, respectively. Furthermore, Causal relation or effect results for beef industry shows that single directional causality effect exists between, or which runs from volume of exports total production output, exchange rate to volume of exports and lastly, causal effect run from volume of exports to total employment. The overall conclusion is that floating exchange rate impact on total production, volume of exports and total employment in the beef industry of the South African red meat industry.