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

Elizabeth Baloi and Albert Mbulaheni Dagume
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Elizabeth Baloi: Department of Economics, University of Venda, Thohoyandou, South Africa.
Albert Mbulaheni Dagume: Department of Economics, University of Venda, Thohoyandou, South Africa.

International Journal of Economics and Financial Issues, 2022, vol. 12, issue 6, 75-85

Abstract: Priorities of developing countries include, obtaining sustained and positive economic growth. Before this can be achieved, however, determinants of positive economic growth need to be identified so that policy makers can make right decisions when allocating funds. The aim of this study was to analyse macroeconomic determinants of economic growth in South Africa for the period 1994-2016, using the cointegration approach. The study utilized both the Augmented Dickey Fuller and the Phillips Perron unit root tests to ensure that all variables involved were stationary; after the tests, all the variables were found to be stationary at first difference I(1). The study then employed the Johansen Cointegration Approach, which suggested that there is cointegration and a long-run relationship between real GDP per capita and the dependent variables. The Vector autoregressive (VAR) was also estimated; results showed that the residuals were robust and well behaved. The Vector Error Correction Model proved existence of a short-run relationship among the variables and that physical capital and inflation have positive impact on economic growth; labour force, government expenditure and FDI have negative impact on economic growth in South Africa. Findings should help in understanding the macroeconomic determinants of economic growth in South Africa.

Keywords: Economic growth; Real GDP per capita; Johansen cointegration; South Africa (search for similar items in EconPapers)
JEL-codes: E52 E62 F43 (search for similar items in EconPapers)
Date: 2022
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