Economic Growth In South Africa Research Articles

Assessing the effect of education levels on economic growth in South Africa

Education is generally considered to be the core source of individuals’ better life and countries' economic and social development. Consequently, attending university and getting high qualifications are perceived as tools that generate and enhance economic growth. The current study aimed to analyse the effect of various educational levels on South African economic growth. The study employed quarterly data from 1995Q1 to 2021Q4. The autoregressive distributed lag (ARDL) model was employed to assess both long-run and short-run relationships among variables. The long-run results revealed that people who completed their grade 12 (with matric certificate) and bachelor's degrees contribute positively to South African economic growth. However, honours and higher degrees (master's and PhD) were found to have an inverse relationship with economic growth in South Africa. On the other hand, the short-run relationship indicated that all education levels contribute to economic growth in the short term. Based on these findings, the author suggests that the South African higher education curriculum should be revised as the negative effect of high education towards economic growth should be resulting in growing unemployment and graduates waiting to be employed rather than creating jobs themselves. Additionally, increasing job creation for graduates with higher qualifications would reduce the number of graduates that leave the country looking for employment abroad.

The Impacts of Climate Change, Carbon Dioxide Emissions (CO2) and Renewable Energy Consumption on Agricultural Economic Growth in South Africa: ARDL Approach

One of the most affected economies by climate change is the agricultural sector. Climate change measured by temperature and precipitation has an impact on agricultural output, which in turn affects the economy of the sector. It is anticipated that using renewable energy will lower carbon emissions that are directly related to climate change. The main objective of this study was to evaluate the impact of carbon dioxide emissions (CO2), renewable energy usage, and climate change on South Africa’s agricultural sector from 1972 to 2021. The nexus was estimated using an Auto Regressive-Distributed Lag (ARDL) Bounds test econometric technique. In the short run, findings indicated that climate change reduces agricultural economic growth and carbon dioxide emissions increase as agricultural economic growth increases. The use of renewable energy was insignificant in the short and long run. Carbon dioxide emissions granger causes temperature and renewable energy unilateral. An ARDL analysis was performed to evaluate the short and long-term relationship between agricultural economic growth, climate change, carbon dioxide emissions and renew able energy usage. The study adds new knowledge on the effects of climate change and carbon emissions on the agricultural economy alongside the use of renewable energy which can be used to inform economic policy on climate change and the energy nexus in the agricultural sector. Study findings point to the prioritization of biomass commercialization, rural and commercial farming sector bioenergy regulations and socioeconomic imperatives research is crucial in order to promote inclusive participation in the production of renewable energy.

Impact of Covid-19 on SMMEs and the future sustainability measures: a systematic review

Abstract Small Medium and Micro Enterprises (SMMEs) have made remarkable contributions to enhancing the economic growth of South Africa. The emergence of COVID-19 retarded the growth of SMMEs due to the lockdown imposed by the government on the 23rd of March, 2020. This study investigated the impact of COVID-19 on SMMEs and the future sustainability measures. To achieve the objectives of this study, a systematic review was adopted and 150 articles were downloaded from various databases for the study. Findings obtained from the study revealed that several authors from different continents have made wide contributions to revive SMMEs amidst COVID-19 disruption. The recommendations made to SMMEs include amplifying their communication networks and adopting e-commerce options, as well as Social Network Sites to reach out to their customers. Other recommendations include the adoption of transactional leadership, strategic management, employee management, financial management, and effective collaboration. The study further recommended that the government should endeavour to provide funding opportunities to SMMEs, improve the provision of infrastructure and enhance the effectiveness of the business environment. The study concludes that the SMMEs that were affected by the interruption of COVID-19 would be revived if the recommendations of this study are applied.

Does Gender Inclusivity Matter for Economic Growth in South Africa? An ARDL approach

With inequality at the forefront of economic development, this paper examined the impact of gender inequality on economic growth in South Africa. Different gender dimensions were considered, including female education, female labor force participation, fertility, and the representation of women in the political arena (democracy). The research applied a quantitative approach (Autoregressive Distributive lag) (ARDL) with secondary data on the proportion of all variables spanning from 1989 to 2019. The results revealed that high fertility negatively affects economic growth. Moreover, the effects are positive when women have greater access to secondary education and the labor market. However, an unorthodox finding from the study reveals that the effects are negative when women have access to political seats in parliament. The paper recommends that policymakers should focus on guaranteeing obligatory secondary education for females in the country. Additionally, policymakers should introduce measures that favor appointing and absorbing women in qualified jobs.

Macroeconomic Determinants of Economic Growth in South Africa (1994-2016): Cointegration Approach

The key macroeconomic objectives being pursued by any developing country are low unemployment, low inflation, and sustainable growth. The main aim of this study was to analyze the effect of unemployment and inflation on economic growthin South Africa for the period of 1994 to 2018, using quarterly data. The results of the unit root test using the Augmented Dickey Fuller and Phillips Perron tests showed that all the variables have a unit root in levels and became stationary after first differencing. The Johansen co-integration test outcomesshowed that there is a long-run relationship among variables,and the Vector error correlation model confirmed that inflation and unemployment have a negative impact on economic growth. Furthermore, the results of the tests for White Heteroskedasticity, Jarque -Bera and Serial correlation LM reveal that there is no problem of Heteroskedasticity, data distribution or serial correlation respectively. The government should implement workable pricing regulations and enforce them to maintain stable price levels. The government should also through the Department of Higher Education and Training, establish a structure that connects the educational system with the industries in South Africa, allowing for the development of skills at the tertiary level and increasing employment.

Threshold effects of public debt on economic growth in South Africa: an application of a regression kink with an unknown threshold

PurposeSouth African public debt has recently increased significantly and has reached worrying levels. This study aims to examine the debt threshold effects on economic growth in South Africa, with an objective of suggesting a debt threshold as South African policymakers will seek to reduce debt to a sustainable level in the coming years.Design/methodology/approachThe study applies a recent novel methodology advanced by Hansen (2017) that allows modelling a regression kink with an unknown threshold.FindingsThe findings of this study indicate a robust debt threshold of 37% of gross domestic product (GDP). Below this threshold, debt is growth-enhancing, but above 37% of GDP, debt is harmful to growth in South Africa.Practical implicationsAmong other things, to reduce the debt-to-GDP ratio, South Africa will need a fiscal consolidation policy by undertaking reforms to state-owned companies to reduce their reliance on public funds, as well as putting in place economic measures to boost long-term growth. The country should also improve tax collection in order to realize additional tax revenue through enhancing compliance and other revenue collection measures.Originality/valueMost of the existing studies on debt threshold effects in Africa are panel data studies, which assume parameter homogeneity, by determining a single debt threshold value applicable to all countries. This can be misleading as the debt-growth nexus is country-specific, being conditional on several factors, such as institutional quality. The present study applies a recent novel methodology, which allows to model a regression kink with an unknown threshold, for the case of South Africa. The methodology endogenously determines the debt threshold while also allowing a country-specific analysis.

The impact of budget deficit on economic growth and its channels in South Africa

PurposeThis paper analyses the direct relationship between budget deficits and economic growth, the channels through which budget deficits inhibit growth and finally, the Granger causality between budget deficit and economic growth in South Africa over the period 1975 to 2020.Design/methodology/approachIn a bid to control for endogeneity that is common in economic growth regressions, the author employed the dynamic ordinary least squares (DOLS) approach.FindingsTowards analysing the direct relationship between budget deficit and economic growth, results show that a 10-percentage rise in the budget deficit slows economic growth by 0.2 percentage points. Results show that the growth inhibiting consequences of the budget deficit in South Africa are principally driven by negatively affecting private and public physical capital accumulation growth, as well as a drop in gross national savings. However, results show no evidence of a deficit reduction effect through long term-real interest rate. The findings reveal a one-way Granger causality running from budget deficits to economic growth.Practical implicationsBased on the findings in this article, expanding the fiscal deficit to support growth is not a viable policy option for the South African economy.Originality/valueThe originality of this paper lies in establishing the Granger causality between budget deficit and economic growth, thus adding to the scant literature, as well as establishing the channels through which budget deficit retards economic growth for the South African economy.

South Africa's titanium industrial policy: A product space perspective

AbstractSouth Africa is a globally significant player in the titanium raw mineral production industry but does not play a large role in its downstream mineral processing. Since downstream activities generate much higher value added, the government has sought to support the end‐to‐end titanium value chain to capture more value from raw titanium before export through ‘beneficiation’‐related policies. This paper applies the input–output product space methodology to generate an overview of those sub‐sectors within the titanium value chain that are likely to support long‐term economic growth in South Africa. We then evaluate whether the selected global value chain activities are supported by the current industrial policy and/or whether a focus on currently excluded global value chain activities is recommended. Our results confirm that although beneficiation appears to make sense in the titanium industry in South Africa, it should (from a product space perspective) be applied neither automatically nor sequentially moving down the value chain. The paper concludes with the shortcomings of the approach and various avenues for future research.

A simulation experiment on ICT and patent intensity in South Africa: An application of the novel dynamic ARDL machine learning model

The aim of this study is to examine the effect of shocks to patent intensity and its empirical and practical policy implications for the South African economy. This stems from the gap in the literature on policy simulation exercises related to the boost in Information and Communications Technology (ICT) and patent intensity in African countries. Hence, this study established the dynamic relationship between patent intensity and economic growth in South Africa for the period of 1980–2020, alongside essential macroeconomic variables such as government expenditure, gross fixed capital formation, labour force, and trade. We use the Autoregressive distributed lag model (ARDL) to capture short-run and long-run relationships, novel dynamic ARDL and Kernel-based Regularized Least Squares (KRLS) to capture the counterfactual shocks in the economic growth. The ARDL result revealed that government expenditure, labour force, and trade openness significantly foster economic growth in the long-run and short-run. Also, while patent intensity and gross fixed capital formation increase the economy in the long-run and short-run, their interaction term significantly diminishes the growth. Further in the analysis is the dynamic ARDL simulation and KRLS, which predicted the counterfactual shocks of economic growth based on a + 26 % change in patent intensity. The result showed that the increasing volume of patent intensity first has a low effect on South Africa economic growth, but later rebound upwardly, thus indicating that change in patent intensity has a long-lasting impact on sustainable economic growth. The direction that is useful for policy is also highlighted and discussed.

Review of Liriomyza huidobrensis (Diptera: Agromyzidae) on potatoes in South Africa, with special reference to biological control using entomopathogens and parasitoids

Although agriculture is crucial to economic growth in South Africa, the industry faces several challenges, including the effects of pests and diseases that contribute to crop loss. Such losses severely affect the maintenance of food security. Therefore, a major challenge is finding effective, environmental-friendly control measures for insect pests. Potatoes are among the four most widely consumed vegetable crops worldwide. However, a potato crop can be infested by various pests, like the devastating leaf miner, Liriomyza huidobrensis (Blanchard) (Diptera: Agromyzidae). The leaf miner species has, since the early 2000s, become an important pest of various vegetable crops in South Africa. The species is highly invasive, causing up to 70 % damage of solanaceous crops. The damage that is caused by the leaf miner is direct, resulting from the female flies feeding on the leaf mesophyll during oviposition, and the larvae mining the leaves. Indirect damage is induced through pathogens entering through perforations that act as vectors of plant diseases. Biocontrol agents, e.g. entomopathogenic nematodes (EPNs), entomopathogenic fungi (EPF), and parasitoids have shown potential against L. huidobrensis. This review investigates the biology and morphological identification of L. huidobrensis, its host range in the Western Cape, and the potential of associated biocontrol agents, like EPNs, EPF and parasitoids, as future control options.

Does Social Investment Influence Poverty and Economic Growth in South Africa: A Cointegration Analysis?

Despite having a middle-income status, many South African households are either already in or are about to fall into poverty. The income and wealth distribution in South Africa is among the most uneven in the world, and many households lack even the most basic access to healthcare, clean energy, and clean water. Although it has increased government spending, South Africa’s government has made significant steps to combat poverty and inequality and encourage economic growth. Understanding the connection between social investment, poverty, inequality, and economic growth is, therefore, necessary to comprehend the ambiguity that currently prevails. In order to analyze the effects of social investment on poverty and economic growth in South Africa between 1990 and 2020, this paper uses the cointegration technique. The cointegration estimates indicate that there is no correlation between social investment, poverty, inequality, and economic development. According to study findings, South Africa’s macroeconomic policies, which seem to be more urban-focused, need to be modified and redirected into inclusive policies with strict constraints to assure their implementation. The transformation of rural and township life will be aided by this plan.

Fiscal Policy and Economic Growth in South Africa

Several fiscal policy strategies have been implemented in South Africa since 1994, starting from the Reconstruction and Development Programme (RDP), Growth Employment and Redistribution (GEAR), Broad-Black Economic Empowerment strategy (BEE), AsgiSA (Accelerated and shared growth initiative for South Africa), and the New Growth Path framework (NGP) with the aim of boosting economic growth. However, the rate of economic growth in the country over the years is not convincing. It is also important to note that poverty still remains prevalent and persistent, predominantly in the poverty-stricken areas of provinces such as Eastern Cape, Limpopo, North West, and Mpumalanga. In light of this, the main aim of the study was to examine the effect of fiscal policy instruments on economic growth in South Africa for the period from 1988 to 2018, utilising the autoregressive distributed lag model, mainly due to the order of integration of the variables. Empirical results revealed that there is a positive relationship between fiscal policy instruments (public sector expenditure, public consumption spending, and taxation) and economic growth. Based on the findings, the study recommends that the government should distinguish between productive and unproductive spending and increase spending on productive sectors. The implication of these findings is that South Africa’s economy is likely to perform better if more resources are diverted from government consumption to investment spending.

Special Economic Zones: Is it an Elixir for economic growth in South Africa

With the introduction of democracy in 1994, South Africa was faced with significant issues that necessitated action to improve the levels of domestic and foreign direct investments required to accelerate economic growth. Moreover, the South African economy comprised a narrow range of exports and an over-dependence on primary production. These challenges hindered the growth within the country as well as the continent. The emergence of Special economic zones (SEZs) internationally as a policy to support industrial development targeted at incentivising economic and infrastructure development based on specific geographical areas and responding to the needs of a particular local area. This is especially useful when the government wants to extend incentives for particular activities outside designated zones. This paper is conceptual and seeks to make a critical analysis of the contribution of SEZ to the country's economy through the use of a literature review. The article further points out the extent to which jobs, foreign direct investments, and employment were triggered by SEZ use.

The Effectiveness of Fiscal Policy on Economic Growth in South Africa: An Empirical Analysis

The Effectiveness of Fiscal Policy on Economic Growth in South Africa: An Empirical Analysis

The Relationship between Economic Growth and Carbon Emissions in South Africa

South Africa has been dismantling the challenges of Global warming and climate change issues pertaining Carbon emissions which have aggravated environmental problems over the past years due to its heavy reliance on coal. About 77% of South Africa's electricity needs are been bestowed by coal. This study serves to determine the relationship between carbon emissions and economic growth in South Africa covering the period between 1984 and 2018. The study employed the ARDL bounds technique to determine the long run relationship among the variables and the VECM to determine the direction of causality among variables. The findings established that there is a long relationship between carbon emission, economic growth, energy consumption, foreign direct investment and trade openness in South Africa. The VECM suggested that there is bidirectional causality flowing between economic growth and carbon emissions. The results also validated the EKC hypothesis both in the long run and short run. It is thus imperative for the policy makers and government to divert their thoughts to more innovative and creative strategies of attaining alternative energy sources especially renewable sources. There is a need for the best environmental policy to enhance infrastructure investment to improve energy efficiency and reduce emissions.

The Challenges and Opportunities of Electricity Generation on Economic Growth in South Africa: An ARDL Approach

This study examines the challenges and opportunities of electricity generation from coal on growth of South African economy. The study utilizes the available annual time series data collected from secondary sources (World Bank) spanning for the period from 1971 to 2015. The study employs the Autoregressive Distributed Lag (ARDL) model and an Error Correction Model (ECM) to analyse the challenges and opportunities of coal-fired electricity generation on growth South African economy. Statistical results from revealed a positive statistically insignificant short run and positive statistically significant long run relationship between electricity generated from coal and economic growth in South Africa. The policy implication from this study is that the policy makers need to acknowledge the positive contribution of coal-fired electricity generation and revise policies on decommissioning of these powerplants. The policymakers should propose and implement policies that encourage coal-fired electricity generation in a way that is environmentally friendly as it boosts economic growth in South Africa.

The effect of mismatched supply and demand of electricity on economic growth in South Africa

ABSTRACT Since 2008, the South African economy has experienced several power cuts (unplanned or as part of a load-shedding schedule), presumably because of the inability of the electricity supply to cover the demand. This paper examines the impact of such a demand-supply mismatch on the country’s economic growth within a production function framework. To do so, we use an Autoregressive Distributed Lag Model (ARDL) for the period 1985 to 2019. The paper finds that a positive mismatch (or surplus) of electricity (supply>demand) boosts economic growth in the long run. This finding provides evidence that supports the necessity of electricity supply expansion and the promotion of energy efficiency measures that both will create a mismatch (surplus) conducive to economic growth.

Is growth in the South African economy profit-led or wage-led?

Orientation: This article assessed the impact of functional income distribution on economic growth, and how it can characterise the growth regime as profit-led or wage-led.Research purpose: This study investigated whether the problem of falling wage share as a percentage of gross domestic product (GDP) may have characterised growth as wage-led or profit-led between 1975 and 2019 in South Africa.Motivation for the study: Economic growth in South Africa has been low post the 2008 financial crisis and employees complain about insufficient wages.Research design/approach and method: This article used the Keynesian aggregate demand model and conducted an autoregressive distributed lag (ARDL) approach to assess the presence of a long-run relationship between changes in income distribution and aggregate demand.Main findings: The study found that the profit rate, rate of capacity utilisation and the real exchange rate have an influence on net exports. Profit rate and rate of capacity utilisation influenced aggregate consumption. Investment was affected by business confidence, profit rate, foreign demand and rate of capacity utilisation. Demand formation was exhilarationist and growth was profit-led. The foreign sector amplified the extent of profit-ledness.Practical/managerial implications: Government should create policies to reduce inequality in income shares. Institutions should consider reformulating labour dynamics to manage the extent to which the foreign sector amplified the economy to be profit-led.Contribution/value add: The South African economy is profit-led, inconsistent with developed country literature, which suggests that economies are generally wage-led. The findings highlight the importance of the foreign sector in determining the demand formation and growth regimes in the economy.

Consumption and Supply of Electricity on Economic Growth in South Africa: An Econometric Approach

This study investigates the relationship between electricity consumption and electricity supply on economic growth in South Africa for the period spanning from 1971 to 2014. The importance of this study is to reveal the short run and long run impact of electricity consumption and electricity supply on economic growth in South Africa. The study borrowed annual time series data from the World Bank online secondary source for the period from 1971 to 2014. Empirical results revealed a positive statistically significant short run relationship and a negative statistically insignificant long run relationship between electricity consumption and economic growth. The results further reveal that renewable electricity has a short run negative statistically significant and positive statistically significant long-run relationship with economic growth in South Africa. Based on empirical results, it can therefore be recommended that the policymakers should implement policies that promotes renewable electricity generation and evaluate policies on electricity consumption so that it can significantly boosts economic growth in the long run.

Carbon Dioxide Emissions from Electricity Power Generation and Economic Growth in South Africa

This study analyses the relationship between CO2 emissions from electricity generation and economic growth in South Africa. The study utilises annual time series data spanning for the period from 1971 to 2014 sourced from the World Bank. The study employs a Vector Error Correction Model (VECM) to analyse the short run and long run relationships. Empirical results revealed that there is a negative statistically insignificant short run relationship and long run negative statistically significant relationship between CO2 emissions and economic growth in South Africa. The Granger causality results revealed noncausal relationship between CO2 and economic growth. The policy implication of this study is that Eskom and policy makers must propose and implement policies aimed at reducing CO2 emissions from electricity generation as it will improve economic growth in South Africa.