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Trade openness and economic growth: experience from three SACU countries

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dc.contributor.advisor Odhiambo, N. M
dc.contributor.author Malefane, Malefa Rose
dc.date.accessioned 2020-02-13T11:54:16Z
dc.date.available 2020-02-13T11:54:16Z
dc.date.issued 2018-02
dc.identifier.uri http://hdl.handle.net/10500/26265
dc.description.abstract This study uses annual data for the period 1975-2014 for South Africa and Botswana, and 1979-2013 for Lesotho to examine empirically the impact of trade openness on economic growth in these three South African Customs Union (SACU) countries. The motivation for this study is that SACU countries are governed by the common agreement for the union that oversees the movement of goods that enter the SACU area. However, although these countries are in a com-mon union, they have quite different levels of development. Based on the country’s level of development, Lesotho is a lower middle-income and least developed country, whereas Botswana and South Africa are upper middle-income economies. Thus, these disparities in the levels of economic development of SACU countries i are expected to have different implications in relation to the extent to which trade openness affects economic growth. It is within this background that the current study seeks to examine what impact trade openness has on economic growth in each of the three selected countries. To check the robustness of the empirical results, this study uses four equations based on four different indicators of trade openness to examine the linkage between trade openness and economic growth. While Equation 1, Equation 2 and Equation 3 employ trade-based indicators of openness, Equation 4 uses a modified version of the UNCTAD (2012a) trade openness index that incorporates differences in country size and geography. Using the autoregressive distributed lag (ARDL) bounds testing approach to cointegration and error-correction modelling, the study found that the impact of trade openness on economic growth varies across the three SACU countries. Based on the results for the first three equations, the study found that trade openness has a positive impact on economic growth in South Africa and Botswana, whereas it has no significant impact on economic growth in Lesotho. Based on Equation 4 results, the study found that after taking the differences in country size and geography into account, trade openness has a positive impact on economic growth in Botswana, but an insignificant impact in South Africa and Lesotho. For South Africa and Botswana, the main recommendation from this study is that policy makers should pursue policies that promote total trade to increase economic growth in both the short and the long run. For Lesotho, the study recommends, among other things, the adoption of policies aimed at enhancing human capital and infrastructural development as well as the broadening of exports, so as to enable the economy to grow to a threshold level necessary for the realisation of significant gains from trade. en
dc.format.extent 1 online resource (xvii, 211 leaves)
dc.language.iso en en
dc.subject Trade openness en
dc.subject Export-led growth en
dc.subject Export promotion en
dc.subject Import substitution en
dc.subject ARDL bounds testing approach en
dc.subject Cointegration en
dc.subject Error-correction modelling en
dc.subject Southern African Customs Union en
dc.subject South Africa en
dc.subject Lesotho en
dc.subject Botswana en
dc.subject.ddc 337.168
dc.subject.lcsh South African Customs Union
dc.subject.lcsh South Africa -- Economic integration
dc.subject.lcsh Free trade -- Economic aspects -- Developing countries
dc.subject.lcsh Free trade -- Economic aspects -- South Africa
dc.subject.lcsh Commerce -- Economic aspects -- South Africa
dc.subject.lcsh Commerce -- Economic aspects -- Botswana
dc.subject.lcsh Commerce -- Economic aspects -- Lesotho
dc.title Trade openness and economic growth: experience from three SACU countries en
dc.type Dissertation en
dc.description.department Economics en
dc.description.degree D. Phil. (Economics)


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