The Impact of Economic Freedom on Economic Growth in the SADC: An Individual Component Analysis

V.I. Gorlach and P. le Roux

Studies in Economics and Econometrics, 2015, vol. 39, issue 2, 41-63

Abstract: The SADC is attempting to achieve development and economic growth. This paper investigates the relationship between economic freedom - in aggregate and on an individual component basis - on economic growth in the SADC. The annual data for 13 SADC countries from 2000 to 2009 are used to construct a generalised method of moments, dynamic panel-data model. When cross-sectional dependence of the error term, individual- and timespecific effects are controlled, economic freedom and GDP per capita are positively related and freedom Granger-causes growth. Gross fixed capital formation and economic openness are positively related to growth but government consumption expenditure is an insignificant driver of growth in the SADC. All five individual components are highly significant and are positively related to growth; however, the magnitude of the elasticity parameters varies. The causality among the individual freedom components indicates that linkages exist between certain of these components1.

Date: 2015
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DOI: 10.1080/10800379.2015.12097280

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