Fiscal Policy and Economic Growth in South Africa

Simbarashe Tendengu (), Forget Kapingura and Asrat Tsegaye
Additional contact information
Simbarashe Tendengu: Department of Economics, Management and Commerce Faculty, East London Campus, University of Fort Hare, Eastern Cape 5700, South Africa
Asrat Tsegaye: Department of Economics, Management and Commerce Faculty, East London Campus, University of Fort Hare, Eastern Cape 5700, South Africa

Economies, 2022, vol. 10, issue 9, 1-14

Abstract: Several fiscal policy strategies have been implemented in South Africa since 1994, starting from the Reconstruction and Development Programme (RDP), Growth Employment and Redistribution (GEAR), Broad-Black Economic Empowerment strategy (BEE), AsgiSA (Accelerated and shared growth initiative for South Africa), and the New Growth Path framework (NGP) with the aim of boosting economic growth. However, the rate of economic growth in the country over the years is not convincing. It is also important to note that poverty still remains prevalent and persistent, predominantly in the poverty-stricken areas of provinces such as Eastern Cape, Limpopo, North West, and Mpumalanga. In light of this, the main aim of the study was to examine the effect of fiscal policy instruments on economic growth in South Africa for the period from 1988 to 2018, utilising the autoregressive distributed lag model, mainly due to the order of integration of the variables. Empirical results revealed that there is a positive relationship between fiscal policy instruments (public sector expenditure, public consumption spending, and taxation) and economic growth. Based on the findings, the study recommends that the government should distinguish between productive and unproductive spending and increase spending on productive sectors. The implication of these findings is that South Africa’s economy is likely to perform better if more resources are diverted from government consumption to investment spending.

Keywords: fiscal policy; economic growth; ARDL; South Africa (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.mdpi.com/2227-7099/10/9/204/pdf (application/pdf)
https://www.mdpi.com/2227-7099/10/9/204/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:10:y:2022:i:9:p:204-:d:895823

Access Statistics for this article

Economies is currently edited by Ms. Hongyan Zhang

More articles in Economies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().