Abstract
This study aims to investigate the relationship between exports, imports and economic growth of a sample of four countries in Southern Africa for the period 1980-2019. In doing so, we check whether the Export-Led growth (ELG), Import-Led Growth (ILG), Growth-Led Export (GLE) and growth-led import (GLI) propositions hold in four Southern African economies, namely Botswana, Namibia, South Africa and Zimbabwe. Specifically, the present study tries to 1) understand to which extent imports, exports and economic growth are correlated in the short and long run in Botswana, Namibia, South Africa and Zimbabwe; 2) assess the effects of imports and exports on the economic growth in each of these countries. To this end, we used time series data, covering the period 1980 to 2019. In doing so, the co-integration tests, Vector Autoregressive “VAR” model (for South Africa) and vector error correction models “VECM” model (for Botswana, Namibia and Zimbabwe) then Granger causality tests are applied to investigate the relationship between the variables. The results show that both short run and long run relationships exist among these variables. On the one hand, our findings failed to validate the export-led growth hypothesis for South Africa in the long-run but provided support for the exports-led growth hypothesis in the short-run. The analysis finds prominent evidence of bidirectional causality between exports and growth for Botswana, Namibia, and Zimbabwe in the long run. On the other hand, a suggestive evidence of unidirectional causality running from growth to imports was found in the case of Botswana, Namibia and South Africa. In addition, bidirectional causality between exports and imports was validated by Zimbabwe case study. Key implications are that the exports development could create employment opportunities and other spillovers. Policy-makers should improve and strengthen the competiveness of export sector. Moreover, Namibian case study confirmed the imports-led growth hypothesis in the long- run, implying that an import liberalization policy could be useful for economic growth in Namibia.
Highlights
Understanding the causality between imports, exports and economic growth is important for the formulation of trade policies toward a country’s economic and social development
We check whether the Export-Led growth (ELG), Import-Led Growth (ILG), Growth-Led Export (GLE) and growth-led import (GLI) propositions hold in four Southern African economies, namely Botswana, Namibia, South Africa and Zimbabwe
The present study aims to: 1) determine whether imports, exports and economic growth are correlated in a long run or a short run in Botswana, Namibia, South Africa and Zimbabwe; 2) determine if imports and exports affect positively or negatively economic growth in Botswana, Namibia, South Africa and Zimbabwe
Summary
Understanding the causality between imports, exports and economic growth is important for the formulation of trade policies toward a country’s economic and social development. Imports and exports are often regarded as key enablers and drivers of economic development in developing countries (Utonga & Dimoso, 2019). This interaction has traditionally been one of the central concerns of development economics. Countries may prefer to adopt the importsubstitution trade policy if import trade does not contribute to economic growth. While, adopting the import substitution trade policy may not necessarily translate to economic growth, exports promotion strategy, as a priority is no guarantee of growth either. Priority or preference for one or the other of these development strategies through international trade should be based on individual national situations of the countries concerned
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