scholarly journals Does Public Debt Matter For Economic Growth?: Evidence From South Africa

2015 ◽  
Vol 31 (6) ◽  
pp. 2187 ◽  
Author(s):  
Yosra Baaziz ◽  
Khaled Guesmi ◽  
David Heller ◽  
Amine Lahiani
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Public Debt ◽  
Inflation Rate ◽  
Gdp Growth ◽  
Debt Ratio ◽  
Dynamic Relationship ◽  
Real Gdp ◽  
Macroeconomic Control

This paper investigates the dynamic relationship between accumulated public debt ratio and real GDP growth in the South African economy over the period 1980-2014. Using two macroeconomic control variables – inflation rate and Openness trade – the link between public debt and real GDP growth is found to depend upon the level of indebtedness of the country. Indeed, public debt in South Africa becomes an impediment to economic growth if it crosses the limit of 31.37% of GDP. Our empirical results have therefore important implications for fiscal policymakers in South Africa to foster economic growth in a context of high public debt level.

scholarly journals Inflation and economic growth: the search for a compromise for the Central Bank's monetary policy

2018 ◽  
Vol 13 (2) ◽  
pp. 153-163 ◽  
Author(s):  
Volodymyr Mishchenko ◽  
Svitlana Naumenkova ◽  
Svitlana Mishchenko ◽  
Viktor Ivanov
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Money Supply ◽  
Inflation Rate ◽  
Negative Impact ◽  
Gdp Growth ◽  
The Real ◽  
Real Gdp ◽  
National Bank ◽  
The Relationship

The article analyzes the influence of inflation on economic growth and substantiates the main directions of increasing the effectiveness of the central bank's anti-inflation policy. In order to determine the limit of inflation, the excess of which has a negative impact on the economic growth, the relationship is analyzed between the inflation rate and the real GDP growth rate on the basis of IMF statistics using the example of 158 countries. It was determined that in 2010–2017, in the global economy, the 6.0% inflation was the marginal value of the inflation rate, beyond which the economic growth rate declined or slowed down. Given the inverse relationship between the inflation rate and the real GDP growth rates as well as empirical calculations for the period 1996–2017, the threshold for inflation rate for Ukraine at the level of 4.51% was determined based on empirical calculations for the 1996–2017 period. The results indicate that the National Bank of Ukraine set the inflation target above the level of the calculated threshold inflation. It has also been established that the link between the rates of nominal GDP growth, as opposed to real GDP, and the inflation rate, is more direct and more tight. It is substantiated that to analyze such dependence it is better to use GDP deflator instead of CPI. The results indicate that deflation constrains economic growth much less than inflation. In order to increase the effectiveness of the central bank’s pro-cyclical monetary policy aimed at supporting economic growth, the relationship between the rates of real GDP growth and the indicator characterizing the gap between the growth rates of M3 and inflation, which actually reflects the real money supply dynamics, is determined. The results obtained allowed to conclude that in 2009 and 2014-2017, the artificial “squeezing” of the money supply took place in Ukraine, resulting in a decrease in the level of the economy monetization by 22.0% in 2017 compared to 2013.It has been proved that in order to minimize the negative impact of inflationary processes on economic growth, the policy of the National Bank of Ukraine should be aimed at eliminating the artificial squeezing of the money supply through a reasonable increase in the economy monetization and the implementation of an effective monetary policy.

Analysis of approaches to assessing changes in welfare and real GDP growth during digitalization of the economy

2022 ◽  
pp. 126-146
Author(s):  
S. G. Marichev
Keyword(s):  
Economic Growth ◽  
Economic Effect ◽  
Added Value ◽  
Gdp Growth ◽  
Digital Goods ◽  
Relative Ease ◽  
Real Gdp ◽  
Digital Services ◽  
Republic Of Bashkortostan ◽  
The Republic

The paper attempts to estimate, in monetary terms, the volume of free digital services in GDP while assessing the contribution of digitalization to changes in welfare and economic growth. Approaches to such an estimation are analyzed and criticized. In particular, the calculation of the added value created in the digital sector does not properly reflect the economic effect of digitalization. Alternative auxiliary methods for estimating the contribution of digitalization to GDP growth are considered: the creation of satellite accounts of the digital economy within the SNA; the categorization and calculation of “purely” digital goods. The paper analyzes the methodology of calculating GDP which takes into account consumer surpluses from the use of free digital goods. The advantages of this methodology are outlined, including the consideration of a significant part of the digital sector of the economy in the calculation of GDP, as well as the relative ease of its use. This methodology was tested by drawing on the example of the Republic of Bashkortostan.

scholarly journals The Contribution of Foreign Direct Investment (FDI) To Domestic Employment Levels in South Africa: A Vector Autoregressive Approach

2019 ◽  
Vol 11 (1(J)) ◽  
pp. 110-121
Author(s):  
Bongumusa Prince Makhoba, ◽  
Irrshad Kaseeram
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Least Squares ◽  
South African ◽  
Empirical Analysis ◽  
Negative Relationship ◽  
Ordinary Least Squares ◽  
Series Data ◽  
The South ◽  
Vector Autoregressive

Several empirical works have yielded mixed and controversial results with regard to the effects of FDI on employment and economic growth. The primary focus of this study is to investigate the contribution of FDI to domestic employment levels in the context of the South African economy. The analyses of the study were carried out using the annual time series data from 1980 to 2015. The macroeconomic variables employed in the empirical investigation include employment, FDI, GDP, inflation, trade openness and unit labour costs. The study used secondary data from the South African Reserve Bank and Statistics South Africa database. The study estimated a Vector Autoregressive/ Vector Error Correction Mechanism (VAR/VECM) approach to conduct empirical analysis. However, the study also employed single equation estimation techniques, including the Ordinary Least Squares (OLS), Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS) and Canonical Cointegrating Regression (CCR) models as supporting tools to verify the VAR/VECM results. This study provides strong evidence of a significant negative relationship between FDI and employment levels in the South African economy. Empirical analysis of the study suggests that the effect of economic growth on employment is highly positive and significant in South Africa’s economy. The study recommends that policymakers ought to invest more in productive sectors that aim to promote economic growth and development to boost employment opportunities in South Africa.

scholarly journals INNOVATION EFFECT THROUGH RESEARCH AND DEVELOPMENT ON ECONOMIC GROWTH IN 35 OECD COUNTRIES

2021 ◽  
Vol 11 (4) ◽  
pp. 159-166
Author(s):  
Maman Ali M. Moustapha ◽  
Qian Yu
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Research And Development ◽  
Regression Model ◽  
Oecd Countries ◽  
Multiple Regression Model ◽  
Gdp Growth ◽  
Real Gdp ◽  
Gdp Growth Rate ◽  
Development Expenditure

This paper analyzes the effect of research and development (R&D) expenditures on economic growth in the Organization of Economic Cooperation and Development (OECD) countries over the period 2000-2016. This study conducts an empirical analysis using a multiple regression model. The main findings confirm that an increase in research and development expenditure by 1% would generate an increase of real GDP growth rate to 2.83 %. The implication emerging from this study is that government and institutions need to increase investment in R&D expenditures to fulfill inclusive economic growth perspective.

scholarly journals AID AND GROWTH IN BANGLADESH: A REASSESSMENT

2018 ◽  
pp. 422-440
Author(s):  
Sharif Hossain ◽  
Rajarshi Mitra ◽  
Thasinul Abedin
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Inflation Rate ◽  
Government Expenditure ◽  
Real Income ◽  
Domestic Investment ◽  
Real Gdp ◽  
Long Run ◽  
Short Run ◽  
Per Capita

Although the amount of foreign aid received by Bangladesh as a share of GDP has declined over the years, Bangladesh remains one of the heavily aiddependent countries in Asia. The results of most empirical studies that have examined the effectiveness of foreign aid or other forms of development assistance for economic growth have varied considerably depending on the econometric methodology used and the period of study. As the debate and controversy over aid-effectiveness for economic growth continue to grow, this paper reinvestigates the short-run and long-run effects of foreign aid received on percapita real income of Bangladesh over the period 1972–2015. A vector error correction model is estimated. The results indicate lack of any significant short-run and long-run relation between foreign aid and per-capita real income. Results further indicate short-run unidirectional causalities from per-capita real GDP to domestic investment (in proportion to GDP), from government expenditure (in proportion to GDP) to inflation rate, from inflation rate to domestic investment (in proportion to GDP), and from domestic investment to foreign aid (as percentages of GDP). Short-run bidirectional causality is observed between per-capita electricity consumption and per-capita real GDP, and between per-capita real GDP and government expenditure (in proportion to GDP).

scholarly journals How applicable is export-led growth and import-led growth hypotheses to South African economy?

2015 ◽  
Vol 4 (2) ◽  
pp. 15-24
Author(s):  
Ntebogang Dinah Moroke ◽  
Molebogeng Manoto
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Adverse Effect ◽  
Time Series ◽  
South African ◽  
Time Series Data ◽  
Series Data ◽  
Long Run ◽  
Reserve Bank ◽  
Equilibrium Relationship

This paper investigated exports, imports and the economic growth nexus in the context of South Africa. The paper sets out to examine if long-run and causal relationships exist between these variables. Quarterly time series data ranging between 1998 and 2013 obtained from the South African Reserve Bank and Quantec databases was employed. Initial data analysis proved that the variables are integrated at their levels. The results further indicated that exports, imports and economic growth are co-integrated, confirming an existence of a long-run equilibrium relationship. Granger causal results were shown running from exports and imports to GDP and from imports to exports, validating export-led and import-led growth hypotheses in South Africa. A significant causality running from imports to exports, suggests that South Africa imported finished goods in excess. If this is not avoided, lots of problems could be caused. A suggestion was made to avoid such problematic issues as they may lead to replaced domestic output and displacement of employees. Another dreadful ramification may be an adverse effect on the economy which may further be experienced in the long-run.

scholarly journals Differentiated outlook to portray secondary cities in South Africa

2021 ◽  
Vol 7 (3) ◽  
pp. 457-477
Author(s):  
Andre DW Brand ◽  
◽  
Johannes E Drewes ◽  
Maléne Campbell ◽  
◽  
...  
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Urban Growth ◽  
South African Context ◽  
Regional Networks ◽  
Extended Phase ◽  
Common Assumption ◽  
African Context ◽  
The Common

<abstract> <p>Cities are playing an increasingly important role in the development and growth of countries. A country's growth and prosperity is largely dependent on the efficient functioning of its cities. The reliance of countries on the ability of their cities to perform crucial central functions, for national growth, continues to rise. South Africa has a long-standing network of cities, towns and localities. These have developed and become hierarchised over the course of history during which population settlements and their distribution have been influenced by colonisation, segregation, industrialisation and globalisation. Since 1911, South Africa has undergone an extended phase of intense urban growth, with areas such as Johannesburg, Cape Town and eThekwini (Durban) agglomerating into dominating economic spaces. There are, however, no universally accepted, distinct criteria that constitute the general characteristics of secondary cities. The common assumption is that secondary cities are those cities that find themselves below the apex of what are considered primary cities. Furthermore, internationally, secondary cities appear to be considered as important catalysts for balanced and dispersed economic growth. In the South African context, the notion of what constitutes secondary cities is to a large extent underdeveloped. The aim of the paper is to appraise interconnected regional networks as a differentiated and novel outlook when determining secondary cities in South Africa. What is evident from the paper is that there are different potential alternatives with which to portray secondary cities.</p> </abstract>

Is public debt hindering economic growth of the Philippines?

2015 ◽  
Vol 42 (3) ◽  
pp. 202-221 ◽  
Author(s):  
Naeem Akram
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Positive Relationship ◽  
External Debt ◽  
The Philippines ◽  
Crowding Out ◽  
Content Type ◽  
Debt Overhang ◽  
Real Gdp ◽  
Domestic Debt

Purpose – Over the years most of the developing countries have failed to collect enough revenues to finance their budgets. As a result, they have to face the problem of twin deficits and to rely on external and domestic debt to finance their developmental activities. The positive effects of public debt relate to the fact that in resource-starved economies debt financing (if done properly) leads to higher growth and adds to their capacity to service and repay external and internal debt. The negative effects work through two main channels – i.e., “Debt Overhang” and “Crowding Out” effects. The purpose of this paper is to examine the consequences of public debt for economic growth and investment for the Philippines. Design/methodology/approach – The present study examines the consequences of public debt for economic growth and investment for the Philippines during the period 1975-2010, by using autoregressive distributed lag technique. Findings – The results reveal that in the Philippines, public external debt has negative and significant relationship with economic growth and investment confirming the existence of “Debt Overhang effect”. But due to insignificant relationships of debt servicing with investment and economic growth, the existence of the crowding out hypothesis could not be confirmed. The domestic debt has a negative relationship with investment and positive relationship with economic growth. Research limitations/implications – First and foremost implication of the study is that heavy reliance on external debt must be discouraged. Therefore, in order to accelerate economic growth, developing countries must adopt those policies that are likely to result in reducing their debt burden, and it must not be allowed to reach unsustainable level. In the case of domestic debt, the present study finds that investment is negatively affected by domestic debt due to the crowding out effect; yet real GDP has a positive relationship with domestic debt. Thus, if policy makers want to use domestic debt as a tool to stimulate real GDP then it must keep an eye on the consequences of domestic debt on the investment. Practical implications – First and foremost implication of the study is that heavy reliance on external debt must be discouraged. Therefore, in order to accelerate economic growth, the Philippines must adopt those policies that are likely to result in reducing their debt burden, and external debt it must not be allowed to reach unsustainable level. In the case of domestic debt, the present study finds that investment is negatively affected by domestic debt due to the crowding out effect; yet real GDP has a positive relationship with domestic debt. Thus, if policy makers want to use domestic debt as a tool to stimulate real GDP then it must keep an eye on the consequences of domestic debt for on the investment. Social implications – It also follows from the estimation results that population growth rate is harmful for the economic growth. So in order to stimulate the growth performance, it must adopt effective population control policies. Similarly, since openness and investment are growth enhancing so there is need for the trade and investment supportive policies. Originality/value – From the review of literature on the issue, it can be broadly summarized that most of the studies are on the relationship of external debt and economic growth, neglecting domestic debt entirely or mentioning it in the passing. Second, most of these studies have been conducted by using panel data. However, as the different countries vary in socio-economic conditions so it is better to conduct the country specific study. The present study is an attempt to fill these gaps in the existing literature.

South African Economy: No Easy Life Ahead

2015 ◽  
pp. 104-116
Author(s):  
P. Mozias
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Interest Rates ◽  
South African ◽  
Trade Unions ◽  
Current Account Deficit ◽  
National Development ◽  
Capital Inflows ◽  
The Other ◽  
The One

South African rand depreciated in 2013–2014 under the influence of a number of factors. Internationally, its weakness was associated with the capital outflow from all emerging markets as a result of QE’s tapering in the US. Domestically, rand plummeted because of the deterioration of the macroeconomic stance of South Africa itself: economic growth stalled and current account deficit widened again. Consumer spending was restrained with the high household indebtedness, investment climate worsened with the wave of bloody strikes, and net export was still prone to J-curve effect despite the degree of the devaluation happened. But, in its turn, those problems are a mere reflection of the deep institutional misbalances inherent to the very model of the national economy. Saving rate is too low in South Africa. This leads not only to an insufficient investment, but also to trade deficits and overdependence on speculative capital inflows. Extremely high unemployment means that the country’s economic potential is substantially underutilized. Joblessness is generated, first and foremost, by the dualistic structure of the national entrepreneurship. Basic wages are being formed by way of a bargaining between big public and semi state companies, on the one hand, and trade unions associated with the ruling party, on the other. Such a system is biased towards protection of vested interests of those who earn money in capital-intensive industries. At the same time, these rates of wages are prohibitively high for a small business; so far private companies tend to avoid job creation. A new impulse to economic development is likely to emerge only through the government’s efforts to mitigate disproportions and to pursue an active industrial policy. National Development Plan adopted in 2012 is a practical step in that direction. But the growth of public investment is constrained by a necessity of fiscal austerity; as a result, the budget deficit remained too large in recent years. South African Reserve Bank will have to choose between a stimulation of economic growth with low interest rates, on the one hand, and a support of rand by tightening of monetary policy, on the other. This dilemma will greatly influence prices of securities and yields at South African financial markets.

The Economic History of South Africa 1948–94

2021 ◽  
pp. 46-65
Author(s):  
Bill Freund ◽  
Vishnu Padayachee
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Economic History ◽  
History Of ◽  
Anglo American ◽  
Relationship Of ◽  
Global And Local ◽  
The Impact ◽  
The Way

This chapter addresses the unfolding economic history of South Africa in the apartheid era (1948–94). The chapter is organized according to a periodization with 1971–73 as a marker of the break, and along specific thematic lines. These include a discussion of the way in which this history has been studied and through what theoretical lenses, before engaging with the main issues, including the impact of Afrikaner nationalism on economic growth, the way in which the minerals energy sector, which dominated early perspectives of South African economic history and perspectives, is impacted in this era of National Party rule. An analysis of the role of one major corporation (Anglo American Corporation) in shaping this economic history is followed by an assessment of the impact of the global and local crisis after c.1970 on the South African economy. An abiding theme is that of race and economic development and the way in which the impact of this key relationship of apartheid South Africa on economic growth has been studied.

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