Exports and economic growth: The case of South Africa

Economic policy has always accorded an important role to export production in the overall growth process in South Africa. Recent policy proposals once again reaffirm this commitment. This paper attempts to ascertain whether the emphasis on export production is justified. Using modern econometric techniques within a multivariate framework, the results show that there is uni-directional Granger-causality running from exports to economic growth in South Africa. In addition, the gross domestic product (GDP) accounting identity underestimates the contribution of exports to economic growth. Thus, deliberate policy measures that stimulate export production will greatly enhance the growth prospects for the South African economy. The results in this paper also indicate that more attention should be given to the promotion of non-primary exports. Copyright © 2008 John Wiley & Sons, Ltd.