Manufacturing Export Elasticities In South Africa - A Time Series Approach

Abstract

Applying time series techniques, this paper estimates and discusses export elasticities of the total economy and manufacturing in South Africa. Notwithstanding some drawbacks of the models estimated, empirical findings suggest that export elasticities, especially for the supply side, are generally small in size and that they are generally insignificant. For instance, for the total economy and total manufacturing long-run export supply functions, elasticities are inelastic. This particular result is not surprising. In fact, the results presented here seem better, both in term of sizes of elasticities and their significance, compared to results of other studies on South Africa. One possible shortfall of estimates could be a limited number of observations. Results of pooled regressions are more robust. Overall, results imply that exports of the economy and manufacturing sectors in particular are not yet fully responsive to changes in economic activity and relative prices. Therefore, policy should aim at strengthening the responsiveness of these sectors, in an appropriate manner.