AN ASSESSMENT OF THE IMPACT OF MACROECONOMIC INDICATORS ON UNEMPLOYMENT RATE IN AFRICA: A CASE STUDY OF SOUTHERN AFRICAN ECONOMIES

Teboho Mashao ()

Journal of Smart Economic Growth, 2024, vol. 9, issue 3, 111-141

Abstract: In recent years, unemployment has been a source of concern for African countries. Hence the objective of this investigation was to examine the influence of selected macroeconomic indicators on unemployment in South Africa, Botswana, Namibia, Lesotho, and Eswatini using annual panel data from 1990 to 2022. To ascertain the effects of the selected macroeconomic indicators, the investigation used the pool mean group (PMG) under the autoregressive distributed lag (ARDL) method. The variables in this investigation are unemployment rate, economic growth represented by gross domestic product (GDP), inflation, government expenditure, gross fixed capital formation and interest rate. The results reveal that government expenditure, interest rate and GDP have an inverse and significant impact on unemployment rate in the long run. In addition, gross fixed capital formation and inflation have a positive impact on unemployment rate in the long run but only the impact of inflation is significant. The analysis yielded the following policy suggestions: One of the remedies lies in the administration of South Africa, Botswana, Namibia, Lesotho, and Eswatini. By concentrating more on developing appropriate policies that alleviate the burden of high production costs for producers, such as absorbing a portion of these costs, governments can help prevent workforce reductions and maintain current employment levels, thus mitigating high unemployment rates. In addition, policymakers should develop policies or strategies to monitor the movement of gross domestic product and promote sustainable gross domestic product.

Keywords: Unemployment; PMG ARDL method; Macroeconomics (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:seg:012016:v:9:y:2024:i:3:p:111-141

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