Growth In South Africa Research Articles

The significance of electricity supply sustainability to industrial growth in South Africa

Objective: The South African business environment is characterized by supply uncertainties, which have large economic implications on the country’s capacity to achieve its industrial goals. South Africa’s industrial decline and falling economic growth is directly associated with decreasing electricity sustainability, as the industrial sector is the main economic contributor to South Africa’s GDP. This study aimed at indicating the nexus of electricity supply and industrial growth in South Africa and to appraise the effects of unsustainable supply on industrial operations. The study also assessed industrial and administrative efforts towards sustainable supply of electricity for industries. Methods: The empirical research utilized a quantitative research design. The study geography was focused in the Gauteng and North West provinces of South Africa. A purposive-convenience sampling was utilized. However, quota-sampling guidelines were considered in targeting actual participants. Enterprises across the service, manufacturing and mining industries were sampled. Descriptive and Bivariate statistics were performed. Findings: Results reflected unsustainable electricity supply for the industrial sector and the poor sustainability has an impact on the industrial growth in South Africa. Results also note that most enterprises is challenge in instituting mitigation strategies such as Small, Micro, Medium Enterprises (SMME’s) across industries. The phenomenon tends to impact electricity intensive and non-electricity-intensive industries differently. Conclusions: The public sector should apply the good governance framework to ensure policies that will priorities electricity supply sustainability to industries. Enterprises are also advised to institute mitigation mechanisms.

In-Service Teachers’ Perception of Continuing Education Programmes in Two African Universities

The study compared the in-service teachers’ perception of continuing education programmes from two universities in Africa; University of Zululand, South Africa (UZ), and Adekunle Ajasin University, Akungba-Akoko, Nigeria, (AAU). The study covers the impact, effectiveness and efficiency of UZ and AAU on in-service teachers’ of continuing education programmes. The target population and sample for the study were the current teachers of continuing education programmes of these universities. The instrument tagged ‘Questionnaire for Perceptions of Continuing Education Programmes by in-service Teachers’ (QPCEPIT) was designed and used for data collection. The descriptive survey research design of ex-post facto was adopted for the study. 150 questionnaires were randomly used for pilot study, carried out at Ekiti State University, Ado Ekiti, Nigeria, whilst 500 questionnaires each were administered at both UZ and AAU of which 365 and 321 responses were valid and analysed respectively. Four research questions were carefully formulated to ascertain the perceptions of continuing education programmes by in-service teachers in the selected universities. Inferential statistics was used to draw conclusions and test the research questions for the study. The results of the comparative study revealed that the conclusiveness of the learning environment, the nature and quality of student support services provided, the quality and learners’ perception of course modules or materials, accommodation problems and venue of the programme were the major predictors for motivation of in-service teachers of the programme. Based on the findings of the study recommendations were made on how the programme will have impact on the in-service teachers and how the universities that are running the programme will be effectively and efficiently manage the programme for the acceleration and advancement of socio-economic growth in South Africa, Nigeria, and the world at large.

ECONOMIC GROWTH MODELS AND GOVERNMENT EXPENDITURE IN SOUTH AFRICA: A DISAGGREGATED IMPACT ANALYSIS

This study examined the effects of government expenditure on different components of economic growth in South Africa. The six key policy variables employed in the analysis were derived from the Solow neoclassical growth model and the New Growth Path (NGP), a macroeconomic framework designed to address the main challenges (unemployment, poverty and inequality) facing the economy as a result of its political past. The analysis of the relationship was carried out using the cointegration model, longrun estimates and the VECM, because assessing the effects of government expenditure on economic growth goes beyond the short-term period, due to the fact that it takes time before government outlays have an effect on the economy. The findings from the analysis revealed that though there exists a long-run equilibrium relationship among the variables with the cointegration results, the long-run estimates showed that aggregate private consumption expenditure and employment-to-population ratio are significantly, but negatively, related to economic growth, while net inflows of foreign direct investment and gross fixed capital formation are negatively related to gross government expenditure. This implies that government needs to direct most of its spending towards human capital development, in order to overcome the challenges. However, government expenditure needs to be monitored, since excessive public capital expenditure might reduce the positive impact of foreign direct investment on economic growth. The study therefore suggests that government should consider increasing its expenditure on the significant variables that support labour and capital development, in order to enhance economic growth in South Africa.

Public health benefits of reducing exposure to ambient fine particulate matter in South Africa

Air pollution is a growing problem in developing countries, and there exists a wide range of evidence documenting the large health and productivity losses associated with high concentrations of pollutants. South Africa is a developing country with high levels of air pollution in some regions, and the costs of air pollution on human health and economic growth in South Africa are still uncertain. The environmental Benefits Mapping and Analysis Program (BenMAP) model was applied to South Africa using local data on population, mortality rates, and concentrations of fine particulate matter (PM2.5), as well as mortality risk coefficients from the epidemiological literature. BenMAP estimates the number of premature deaths that would likely have been avoided if South African air quality levels met the existing annual National Ambient Air Quality Standard (NAAQS) of 20 μg m−3, and the more stringent World Health Organization (WHO) guideline for annual average PM2.5 of 10 μg m−3. We estimate 14,000 avoided premature mortalities in 2012 if all of South Africa met the existing NAAQS annual average standard for PM2.5. These avoided cases of mortality have an estimated monetary value of $14.0 billion (US2011$), which is equivalent to 2.2% of South Africa's 2012 GDP (PPP, US2011$). We estimate 28,000 avoided premature mortalities if the more stringent WHO guideline for annual average PM2.5 is met across South Africa, which when expressed as a national burden is equivalent to 6% of all deaths in South Africa being attributable to PM2.5 exposure. These avoided cases of mortality have an estimated monetary value of $29.1 billion, which is equivalent to 4.5% of South Africa's 2012 GDP. These results show that there are significant public health benefits to lowering PM2.5 concentrations across South Africa, with correspondingly high economic benefits.

The Nexus between Consumer Confidence and Economic Growth in South Africa: An ARDL Bounds Testing Approach

Consumption expenditure contributed a total of 2.2% to economic growth in 2017. Hence, the South African economy is consumption driven. Therefore, there is a need to understand the growth-economic confidence relationship within the South African context. In this spirit, this paper set to explore the short- and long-run relationship between consumer confidence and economic growth in South Africa for the sample period 1994Q1 to 2017Q4. The method applied, chiefly because our variables were I (0) and I (1) and that we sought short- and long-run estimates were the Autoregressive Distributed Lag (ARDL) model using the bounds testing procedure. The results showed that consumer confidence contributed about 0.025% to economic growth in the short-run, and about 0.4% in the long-run. The results suggest that boosting consumer confidence should be keys for South African policy-makers to boost growth in the short- and long-run. In particular, we recommend policy certainty and political stability as some of the ways to attract consumer confidence.

Energy Consumption and Economic Growth: A Trivariate Framework of South Africa

The study investigates the causal relationship between energy consumption and economic growth in South Africa, covering the period of 1980-2014. In a trivariate framework which includes electricity and inflation as additional variables by applying the Autoregressive Distributed Lag (ARDL) integration method. First unit root test was employed; results indicated that all variables were non-stationary at the level and stationary at their first differences, using the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP). The results show a long-run relationship among the variables using the ARDL integration approach. The Granger causality test indicates a unidirectional running from inflation to economic growth, which supports the growth hypothesis as documented in the literature and there was no causality between electricity consumption and economic growth, supporting the neutrality hypothesis. Any policies concerning energy consumption should be re-evaluated to confirm that it will not disturb economic growth. Keywords: ARDL, Economic Growth, Energy Consumption, Granger Causality, and South Africa. DOI : 10.7176/JESD/10-8-12 Publication date : April 30 th 2019

Assessing the impact of fiscal policy on economic growth in South Africa

Assessing the impact of fiscal policy on economic growth in South Africa

Foreign trade and economic growth in South Africa

ABSTRACT This study investigates the effects of foreign trade (economic openness) on South African economic growth. We control for the role of human capital accumulation, physical capital and foreign direct investment. We employ the cointegration test, Gonzalo-Granger common long-memory test, and the error-correction model. The empirical evidence indicates that foreign trade is a significant catalyst of growth in both the short- and long-run period. The evidence also indicates that human and physical capital are significant catalyst of growth in the long-run. Accordingly, South Africa should have policies that encourage foreign trade in order to boost both short and long-run economic growth. Policies to invigorate the education system and physical capital in South Africa should persist over a long period of time to realize their expected economic benefits.

The impact of electricity prices on sectoral output in South Africa from 1994 to 2015

PurposeThe purpose of this paper is to examine the impact of electricity prices on sectoral output in South Africa from 1994 to 2015 and also econometrically examine the impact of electricity prices on output at sectoral levels over the same period. The paper also put forth a policy proposal that brings together electricity end-users, suppliers and government regulators with the goal of conveying an effective outcome that withstands output growth without necessarily compromising social and developmental objectives.Design/methodology/approachLocal sources of data were utilised in applying panel data analysis. The paper utilised the data from South Africa Reserve Bank and Quantec South Africa. The Hausman test indicated that the fixed effect estimator is the appropriate estimator for this paper. Robust estimators (such as Driscoll Kraay (SCC), feasible generalised least of squares, least square dummy variables and seemingly unrelated regression (SUR) were employed for consistent and efficient inferences. The study also utilised the SUR regression to analyse the impact of electricity prices on output at a sectoral level.FindingsThe fixed effect estimator results of this paper indicate that electricity prices have a negative impact on sectoral output. Again, the SUR estimator shows that the sectoral output disparately responds to electricity prices change in South Africa over the period 1994–2015.Thus, six out of eight sectors significantly and negatively respond to electricity prices change in South Africa. The mining and the construction sectors seem not to be affected by electricity prices changes unlike agriculture, manufacturing, government services, transport and communication finance and trade.Research limitations/implicationsAlthough the research has attained its aims, there were some inevitable limitations. For instance, unlike the time series and cross-sectional data, the panel data were tardily assembled, since the researchers had to gather data for specific variables for each and every selected individual sector. However, this did not compromise the research findings since the panel data from both developed and developing countries are available from sources such as Easy data Quantec.Practical implicationsThe results of the study show that electricity price is a limiting factor to the sectoral production growth in South Africa. Therefore, any conservation policies regarding energy or electricity should be implemented with caution. Indeed, the government should implement policies that increase energy and electricity supply in the country. Thus, the government should set affordable prices of electricity that benefits both the power and economic sector output. In addition, the electricity regulators should set prices that do not damage output across economic sectors in South Africa. Again, the government should continue supporting the imposition of subsidies on the economic sectors that are more sensitive to electricity price. To this end, the study provides a policy proposal (in line with the South African National Development Plan and the climatic change strategies) that connects electricity producers, government electricity regulators, consumers and the society with the goal of conveying an effective outcome that withstands output growth without necessarily compromising social and developmental objectives.Social implicationsCost-reflective electricity prices may be a burden to end users but this will assist in the maintenance and expansion of the power industry to get rid of electricity supply and demand imbalances which may escalate electricity prices in future. Indeed, the electricity end users including the society should pay a price that improves generation capacity to avoid power shortages since the lack of energy (electricity) contributes to poverty and deprivation and can contribute to economic decline. In this regard, the government should work hard to reduce the public resistance towards the cost-reflective electricity prices strategy; there is a need to keep the electricity end users informed on the economic impacts of such strategies in order for them to make informed choices.Originality/valueThis paper utilised the panel data for sectoral analysis. Again, the study aimed to provide policymakers with more information on the behaviour of different sectors with regards to electricity price changes, and hence assisting regulators and policymakers in future decisions on electricity price changes in relation to output at sectoral levels. Better knowledge of the link between electricity prices and the real sector output should permit better regulatory decisions to facilitate economic efficiency. Furthermore, it helps the government to identify sectors in need of power subsidies to enhance economic development.

The Sectoral Employment Intensity of Growth in South Africa

Concerns have been expressed recently about the inability of the South African economy to provide adequate employment for the increasing number of job seekers. This paper investigates how sectoral employment intensity of output growth in the eight non-agricultural sectors of the South African economy has evolved in the period from the first quarter of 2000 to the fourth quarter of 2012, with a view to identifying key growth sectors that are employment intensive. Empirical findings of the study suggest that total non-agricultural employment and GDP do not move together in the long run, implying that jobless growth occurred in South Africa during the period under review. This supports the view that South Africa has become less labour-intensive and more capital-intensive. Results of a sectoral composition confirm a long-run relationship between employment and growth in the finance and business services, manufacturing, transport and utilities sectors. In particular, the results suggest that sectors within the tertiary sector are the best performing sectors in terms of employment intensity of output growth, reflecting the changing structure of the economy and the nature of employment shifting away from primary towards the tertiary sector. Investment in the tertiary sector is necessary to foster new employment opportunities and can assist in improving overall employment intensity in South Africa.

Public agricultural research and development spending in South Africa – update

ABSTRACTIn developing countries, where few incentives exist for private sector investment in research, public investment in agricultural research and development (R&D) is critical for technological change that stimulates agricultural development, food security and poverty alleviation. This article analyses trends for key indicators in agricultural R&D in South Africa, building on the work of Liebenberg et al. (2011). The paper uses data collected from a range of sources including the Agricultural Science and Technology Indicators (ASTI) surveys comprising data for the period 2000–2014. Results show fluctuations in agricultural R&D spending, although there was a general increase in gross spending on R&D at national level, reflecting a continued trend of increased funding for non-agricultural research. Research spending intensity ratios for South Africa remain higher than the recommended 1 per cent. Despite the harsh economic environment and lower than expected economic growth in South Africa since 2011, the government continues to provide the major source of funds for the Agricultural Research Council (ARC). When compared with countries in Africa south of the Sahara, South Africa continues to rank second in agricultural R&D investment, whilst it invests much less than its BRICS (Brazil, Russia, India and China) counterparts, despite having the highest research intensity ratio. The article supports Liebenberg et al. (2011)’s recommendations for revisiting policies for long term support of agricultural R&D and explores mechanisms for the ARC to establish sustainable funding streams for agricultural R&D. Recommendations for establishing comparable research spending intensity ratios are also made.

An investigation of the contribution of processed and unprocessed agricultural exports to economic growth in South Africa

The paper attempts to empirically test the contribution of unprocessed and processed agriculture of exports to economic growth in South Africa. The study used time series data which spanned from 19...

An assessment of the role of real exchange rate on economic growth in South Africa

An assessment of the role of real exchange rate on economic growth in South Africa

Valuation of Intellectual Property: Prospects For African Countries

The idea of Intellectual Property (IP) is sophistry, the value of which till date, eludes us. How do we measure or value intangible assets? The discussion on the how of Intellectual Property Valuation(IPV) makes no sense if we do not understand the concept of valuation. Unfortunately, IP laws in South Africa did not define IPV. The only legislation in South Africa that defines valuation, did so in the context of tangible property. This article shall begin with answering the question – Why value IP? We will explore the methods for valuing IP and question the universality of the methods while exploring the regulatory bodies that checkmate those methods. We will search through the courts' altitude on IPV and expose the problems of IPV. And finally, we will reveal the South Africa position as well as make recommendations towards the growth of South Africa and other African Countries.

Empirical Investigation of Exports and Economic Growth: Evidence from Sane Countries, 1980-2016

This study employed the Autoregressive Distributed Lag (ARDL) Bounds test technique to cointegration to investigate the relationship between exports and economic growth in SANE countries (South Africa, Algeria, Nigeria and Egypt) from 1980 to 2016. The results of the long-run relationship revealed that exports had a positive and insignificant relationship with economic growth in South Africa and Egypt. Nevertheless, exports had a positive and significant relationship with economic growth in Algeria and Nigeria. Furthermore, the causality results showed that while a uni-directional causality from exports to real GDP per capita growth rate exists for Nigeria and Egypt, a one-way causality runs from real GDP per capita growth rate to exports for South Africa. This indicates that an export-led growth (ELG) hypothesis is valid for Nigeria and Egypt. However, evidence of a growth-led export (GLE) hypothesis was found for South Africa. Nevertheless, no evidence of either an ELG hypothesis or GLE hypothesis was found for Algeria. The study, therefore, recommends that the Nigerian and Egyptian governments should continue with export-led development strategies, in order to sustain the export-led growth strategy, there is need for diversification of exports in South Africa and Algeria, the South African government should continue with growth-led development strategies, in order to sustain the growth-led export strategy, and the spate of political instabilities should be discouraged through democratic ideals with a view to attracting foreign investors in the export sector.

Mining Production and Economic Growth Nexus

The production crisis in the mining sector is a great concern to the South African economy. This happens regardless of the policies and implementation of investment strategies that the government has put in the industry, which still has a steady contribution to the gross domestic product. The aim of this study was to investigate the relationship between mining production, government expenditure and economic growth in South Africa. As a resource-endowed country that depends primarily on minerals to enhance growth, the operation in mining production is crucial. The paper employed the vector error correction model to analyze the annual time series data from the South African Reserve Bank covering the period 1983 to 2015. Preliminary results show that all variables were found to be stationary at first difference. Subsequently, the cointegration results indicated that there was at least one cointegrating equation, which confirmed the existence of a long-run relationship in the system. The long-run analysis showed that mining production excluding gold has a significant coefficient compared to all other variables, and has a positive relationship with expenditure on gross domestic product. The mining production of gold showed a negative relationship with expenditure on the gross domestic product, which supports the ‘resource curse’ theory. Finally, the short-run analysis showed that the system will come back to equilibrium. The study recommends that policymakers should formulate policies that will encourage and attract both local and international investors in this industry, especially in mining production excluding gold.

Assessing and planning future estuarine resource use: A scenario-based regional-scale freshwater allocation approach

Rapid urbanisation and industrial growth in South Africa increases the need for proactive allocation of freshwater resources on a regional scale. A nine-step method is described that sets long-term targets for water resource condition and future use with a focus on estuary water quantity and quality requirements. The approach specifically focuses on the environmental flow allocation to estuaries, nested within a broader, regional (multi-catchment and multi-estuary) water resource landscape. The method differs to most other approaches in that the responses of multiple estuaries to escalating future development in a region are coherently quantified (versus only considering a single estuary in a single catchment). A case study that assessed the health, biodiversity importance and resilience to current and future pressures of 64 estuaries is used to illustrate the method. Projected growth in the study area was integrated into a range of future dam development and wastewater discharge scenarios. The results showed that estuaries around the urban centres were in poor condition, but those in the more rural areas in a more natural state. As a result of their small size, most of the estuaries in the region had little resilience to changes in freshwater quantity and nutrient loading. In contrast, the larger systems, targeted for dam development, only showed sensitivity to water abstraction during low-flow periods when base-flow reduction caused mouth closure and changes in nutrient processes. Broadly, the approach aimed to find a balance between ecological requirements and socio-economic development, which meant that maintaining larger systems in relatively good condition would be at the expense of smaller systems that are already in a poor condition. The approach developed was successful in quantifying the responses of multiple estuaries to escalating future pressures on a regional scale, and could be replicated to assist in managing water resources elsewhere in data-limited environments.

An Analysis of the Effectiveness of Interest Rates to Facilitate Price Stability and Economic Growth in South Africa

Abstract Price stability supports accelerated economic growth (GDP), thus the main objective of most central banks is to ensure price stability. The South African economy is experiencing a unique monetary policy dilemma, where a high inflation rate is accompanied by high interest rates and low GDP. This is an unconventional monetary policy scenario and may hold strenuous repercussions for the South African economy. This dilemma was held as the rationale behind this study. The study investigated the effectiveness of the use of the repo rate as an instrument to facilitate price stability and GDP in South Africa. Long-run, short-run and casual relationships between interest rates, inflation and GDP were therefore analyzed. The methodology is based on an econometric process which included a Johansen co-integration test, with a Vector Error Correction model (VECM). Casual relationships were also tested using Granger causality tests. Results of the Johansen Co-integration test indicated the presence of co-integrating long-run relationships between the variables and a significant and negative long-run relationship between the repo rate and inflation rate was revealed, whereas GDP and inflation rate exhibited a significant and positive long-run relationship. The study also found short-run relationships between inflation and GDP, but not for inflation and the repo rate. Further areas of potential research may fixate towards the assessment of other significant alternative policy tools which may be utilized by various countries’ monetary policy authorities to influence supply specific inflationary pressures led by the cost-push phenomena, especially in the short-run.

An Analysis of the Impact of Economic Growth, Political Instability and Exchange Rate on Tourism Growth in South Africa

Globally the tourism sector is one of the main economic sectors in attracting and generating foreign revenue. The sector accounts for seven percent of global foreign revenue as an export industry. In South Africa the low growth environment over the last decade has resulted in the need to find alternative economic sectors in support to traditional sectors such as mining and manufacturing, to drive higher levels of economic growth in the country. The aim of this study was to analyse the relationship between tourism as the dependent variable, and economic growth, exchange rate changes and political stability, as independent variables. The study region selected is South Africa, which is classified as a developing country and is in many cases seen as the proxy for emerging economies. This study followed a quantitative research approach with time series data from 1996 to 2017. The relationships between the variables were analysed by means of the Johansen cointegration, Vector Error Correction and Granger causality econometric models. The results indicated that there are both long and short-run relationships between the variables. A number of policy recommendations that could potentially contribute to the extension of the role of tourism in development include improved political and currency stability in the country as well as the relaxation of visa requirements.

Another look at the relationship between energy consumption, carbon dioxide emissions, and economic growth in South Africa

This study explores the energy use and economic growth nexus from 1960 to 2016 in South Africa while accounting for capital, labour, and carbon dioxide emissions. We applied Bayer and Hanck (2013) combined co-integration approach, Pesaran et al. (2001) bounds test and Kripfganz and Schneider (2018) critical values and approximate p-values. The empirical evidence finds support for a long-run equilibrium relationship among investigated variables. The Granger causality test indicates one-way causality from energy use to economic growth, validating the energy-led growth hypothesis. Our study found an inverted U-shaped pattern between energy use and economic growth in the long run. This finding suggests that at a higher level of economic development there is less intensification of energy consumption, hence, signifying a decline in energy intensity while validating energy efficiency in South Africa.