How to Increase the Growth Rate in South Africa?

Saten Kumar, Gail Pacheco and Stephanie Rossouw

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: Given the concern about the low growth rates in African countries, this paper deals with the issue of how to increase the said growth rates by using South Africa as a case study. This paper attempts to answer this question by examining the determinants of total factor productivity (TFP) and productivity growth. We utilise the theoretical insights from the Solow (1956) growth model and its extension by Mankiw, Romer and Weil (1992). Our empirical methodology is based on the London School of Economics Hendry’s General to Specific Instrumental Variable method and Gregory and Hansen’s (1996a; 1996b) structural break technique. Our findings imply that variables like human capital, trade openness, foreign direct investment, financial efficiency, democracy and financial reforms improves TFP and productivity growth in South Africa. Importantly, the key determinants appear to be democracy and financial liberalisation.

Keywords: Solow model; total factor productivity; productivity growth. (search for similar items in EconPapers)
JEL-codes: O10 O15 (search for similar items in EconPapers)
Date: 2010-10-11
New Economics Papers: this item is included in nep-dev and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: How to Increase the Growth Rate in South Africa? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eei:rpaper:eeri_rp_2010_31

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