The macroeconomic drivers of economic growth in SADC countries

This study empirically investigates the key macroeconomic determinants of economic growth in three Southern African Development Community countries, namely: Malawi, Zambia, and South Africa, using annual data for the period 1970-2013. The study uses the recently developed Autoregressive Distributed Lag bounds-testing approach to co-integration and error correction model. In Malawi, the study finds that investment, human capital development, and international trade are positively associated, while inflation is negatively associated with economic growth in the short run. In the long run, the results reveal that investment, human capital development, and international trade are positively and significantly associated, while population growth and inflation are negatively and significantly associated with economic growth. In Zambia, the short-run results reveal that investment and human capital development are positively and significantly associated, while government consumption, international trade, and foreign aid are negatively and significantly associated with economic growth. The long-run results reveal that investment and human capital development are positively and significantly associated, while foreign aid is negatively and significantly associated with economic growth. In South Africa, the study results show that in the short run, investment is positively and significantly associated, while population growth and government consumption are negatively and significantly associated with economic growth. In the long run, the results reveal that economic growth is positively and significantly associated with investment, human capital development, and international trade, but negatively and significantly associated with population growth, government consumption, and inflation. These results all have significant policy implications. It is recommended that Malawian authorities should focus on strategies that attract investment: in addition there is a need to improve the quality of education, encourage export diversification, reduce population growth, and ensure inflation stability. Similarly Zambian authorities should focus on creation of incentives that attract investment, provision of quality education: moreover they need to improve government effectiveness, encourage international trade and ensure the effectiveness of development aid. South African authorities are recommended to focus on policies that attract investments, the provision of quality education, and trade liberalisation: concomitantly there is also a need to reduce population growth, government consumption and inflation.EconomicsPh.D. (Economics

An empirical test of the exogenous growth models: Evidence from three Southern African countries

An Empirical test of the exogenous growth models: Evidence from the three Southern African countriesThis paper aims to empirically investigate the relevance of exogenous growth models in explaining economic growth in three Southern African countries, using the recently developed ARDL bounds-testing approach. Furthermore, the relevance of the convergence hypothesis in these study countries is tested using an extended exogenous growth model. The study results reveal that the predictions of the Solow and augmented Solow growth models are consistent in the three study countries, and that the convergence hypothesis holds. However, when additional factors are taken into account in exogenous growth models, the response of income per capita due to changes in investment and human capital development is slow in economies with low income per capita, such as Malawi and Zambia, compared to South Africa, which is ranked as an economy with a high income per capita. This study has important policy implications in these study countries. These implications include the need for policy makers to ensure that macroeconomic stability is encouraged by reducing government consumption, inflation, and population growth; and by promoting trade in order to allow for the diffusion of technologies from abroad.Colleges of Economic and Management Science

Macroeconomic Policy Reform and Economic Growth in Zambia

The paper discusses the role that government policies and macroeconomic reforms played in influencing economic growth in Zambia during the period 1964-2013. The study identifies two economic systems that guided the implementation of policies and reforms in Zambia. The first relates to a command-driven economy, where economic growth patterns were influenced by nationalist ideologies and administrative controls. The second relates to a market-driven economy where economic growth patterns were influenced by market-oriented fundamentals with some degree of administrative controls. The study concludes that economic policies and reforms were instrumental in influencing the performance of major macroeconomic drivers of economic growth in Zambia such as the accumulation of physical capital, human capital development, international trade, real exchange rate determination and inflation

Public Debt and Economic Growth Nexus in the Euro Area: A Dynamic Panel ARDL Approach

This study investigates the relationship between public debt and economic growth using panel data from 10 European Countries. Using a panel ARDL approach, the results show that public debt, government consumption, and the real exchange rate are negatively associated with economic growth both in the short- and long-run. Furthermore, investment and the real interest rate were found to be positively associated with economic growth both in the short- and long-run. Inflation and trade openness were found to have mixed results: both were negatively associated with economic growth in the long run while in the short run the relationship was positive and consistent across groups with a few exceptions. Second, the study results also showed that debt is nonlinear at the 70% threshold only in the long-run while in the short run the results were consistently negative and across groups. The study results have significant policy implications for the Stability and Growth Pact of the Euro area. It is recommended that member states should ensure fiscal sustainability by balancing their fiscal budgets to effectively reduce the accumulation of public debt as well as implementing structural reforms that will improve the efficiency of investment as well as macroeconomic stability.JEL Codes - C23, F34, F43, H63, N1