2018, Volume 71 - Issue 4
RSS feed citation: At RePEc
Publication date: 07 November 2018
IMPACT OF TRADE OPENNESS ON ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM SOUTH AFRICARead the article
TRADE OPENNESS AND ECONOMIC GROWTH IN SADC COUNTRIESRead the article
CAUSALITY TESTING BETWEEN TRADE OPENNESS, FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH: FRESH EVIDENCE FROM SUB-SAHARAN AFRICAN COUNTRIESRead the article
Malefa Rose MALEFANE, Department of Economics, University of South Africa, UNISA, Pretoria, South Africa
Nicholas M. ODHIAMBO, Department of Economics, University of South Africa, UNISA, Pretoria, South Africa
This paper examines the impact of trade openness on economic growth in South Africa. The study employs the autoregressive distributed lag (ARDL) bounds testing approach to investigate the dynamic impact of trade openness on economic growth. Unlike some previous studies, the current study uses four proxies of trade openness, with each proxy addressing a different aspect of trade openness. The first proxy of trade openness is derived from the ratio of trade to gross domestic product (GDP). The second proxy is the ratio of exports to GDP, while the third proxy is the ratio of imports to GDP. The last proxy is an index of trade openness, which captures the effects of residual openness, resulting from taking the country’s size and geography into account. Based on the long run empirical results, this study finds that trade openness has a positive and significant impact on economic growth when the ratio of total trade to GDP is used as a proxy, but not when the three other proxies are employed. However, in the short-run, when the first three proxies of openness are used, the study finds trade openness to have a positive impact on economic growth, but not so when the trade openness index is employed. These results, therefore, suggest that the promotion of policies that support international trade is relevant in the South African economy.
ARDL, Economic Growth, Exports, Imports, South Africa, Trade Openness
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