Export-Led Growth In South Africa: Evidence From The Components Of Exports

Abstract

The main objective for this paper is to test the export-led growth hypothesis by analyzing the causal relationships between the components of exports and real gross domestic product for South Africa for the quarterly period 1960:1 to 2008:3. Total exports are decomposed into merchandise exports, net gold exports, export of services and income receipts. The study also uses a modified version of the Granger causality test developed by Toda and Yamamoto (1995 Toda, H Y and Yamamoto, T (1995): “Statistical Inference in Vector Auto regressions With Possibly Integrated Processes”, Journal of Econometrics, 66, 225–50.[Crossref], [Web of Science ®] , [Google Scholar]), which is an innovative and more efficient econometric methodology compared to traditional Granger causality tests, to test for the causal relationship between the variables. This study does find long-run relationships between the components of real exports and real gross domestic product. Causality tests find evidence of export-led growth only in the case of merchandise exports. For income receipts and service exports there was reverse causality. There was no evidence of causality in either direction in the case of net gold exports.

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