Browsing by Subject "Economic growth"

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    An analysis of economic infrastructure investment in South Africa
    (Wiley, 2005) Perkins, Peter; Fedderke, Johann; Luiz, John
    This paper analyses long-term trends in the development of South Africa's economic infrastructure and discusses their relationship with the country's long-term economic growth. A database covering national accounts data, railways, roads, ports, air travel, phone lines and electricity was established for this purpose, and may facilitate further quantitative research. PSS (Pesaran, Shin and Smith, 1996, 2001) F-tests are used to identify directions of association between economic infrastructure and economic growth. These indicate long-run forcing relationships from public-sector economic infrastructure investment and fixed capital stock to gross domestic product (GDP), from roads to GDP, and from GDP to a range of other types of infrastructure. There is also evidence of potential simultaneity between specific types of infrastructure and GDP. The evidence suggests three main findings. Firstly, the relationship between economic infrastructure and economic growth appears to run in both directions. Inadequate investment in infrastructure could create bottlenecks, and opportunities for promoting economic growth could be missed. Secondly, South Africa's stock of economic infrastructure has developed in phases. Policymakers should focus on choosing or encouraging the right type of infrastructure at the right time. Thirdly, the need for investment in economic infrastructure never goes away. The maintenance and expansion of infrastructure are important dimensions of supporting economic activity in a growing economy, provided that individual projects are chosen on the basis of appropriate cost-benefit analyses.
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    Banks, stock market and economic growth in Botswana: a time series analysis
    (2018) Malebye, Nthabiseng; Chamisa, Edward
    This study examines the relationship between banks, stock market and economic development in Botswana using quarterly data from 1995 to 2016. To find out if there is a link between financial development and economic growth, the three measures of stock market development used are stock market capitalization, total value of shares traded and turnover. For bank-based financial development, the proxy is bank credit to private sector and the measure of economic growth is real gross domestic product (GDP) per capita. To analyse the long run and short run relationships among the variables of interest, this study implements the Autoregressive Distributed Lag (ARDL) cointegration technique and the Granger causality technique to find the direction of causality. The findings indicate that there is a positive short and long run relationship between stock market variables and economic growth when turnover and market capitalization are used as proxies and value traded is significant and negatively related to economic growth. The study found that bank credit to private sector is negatively related to economic growth both in the short and the long run. There is bidirectional causality between stock market financial development and economic growth and no causal relationship between banking financial development and economic growth in Botswana. This study recommends that there should be appropriate reforms to develop the financial sector in Botswana to help promote economic growth. Botswana should also have reforms to promote economic growth to foster stock market financial development. This study also offers a comprehensive and detailed overview of the state of the economy, banking system and the financial markets system of Botswana which can help foreign investors as well as individual and institutional investors in making sound investment decisions.
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    Causal relationship between financial capital financial flows and economic growth in South Africa
    (2025) Dyushu, Mphumleli; Alhassan, Abdul Latif
    The study's main objective was to test the causal relationship between financial capital flows and economic growth in South Africa. Developing countries rely significantly on foreign capital inflows to supplement domestic savings for investment and growth. Foreign investment is essential to emerging nations' economic growth because it augments domestic savings for expansion and investment. Using a global financial capital pool has significant potential benefits for many developing nations. Due to low growth levels in emerging markets, efforts have been made to identify the factors that hinder growth. Capital flow movements has been one of those factors. There has been sharp reversal of portfolio flows, triggering concerns about financial stability and consequently, economic growth. South Africa's economy is heavily influenced by external financial flows, including foreign direct investment and portfolio investments. Policymakers need empirical evidence to formulate effective strategies that attract sustainable capital inflows while promoting economic growth and development. The study used secondary quantitative data from the World Bank, StatsSA and the South African Reserve Bank. Time series data that spanned from 1990 to 2023 was used for estimation. The study employed stationarity tests, cointegration analysis and the ARDL technique. The empirical results show that the relationship between Capital flows and GDP is negative. The relationship is marginal though and this suggests that capital flows, to a lesser extent, negatively affects GDP. The empirical results also reveals that the relationship between Terms of Trade and GDP in positive. The study recommended that there is need for government to come up with measures that can make capital flows contribute positively to growth. One measure would be to prolong the duration with which capital flows stay in S.A. in periods of economic uncertainty, capital tend to flow out of South African and this hurts growth.
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    The economics of military spending, conflict and growth
    (2015) Tian, Nan; Dunne, John Paul
    This dissertation is a collection of studies on the economics of peace and security. Chapter one introduces the roles military spending and conic play in affecting economic growth, while also considering the causes of civil conflict. Chapter two investigates the relationship between military expenditure and economic growth, considering group heterogeneity and non-linearity. Using an exogenous growth model and dynamic panel approach, the results suggest military burden to have a negative effect on growth. Breaking the overall panel down into various sub-samples shows estimates that are remark-ably consistent with the full panel. These results provide strong support for the argument that military spending has an adverse effect on growth. There are, however, some intriguing results suggesting that for certain types of countries military burden has no negative growth effect. Chapter three deals with the transnational spatial spillover effects of conflict on neighbouring countries. It moves beyond using geographical dis-tance as a spillover measurement and allows for economic and political distances. The initial empirical results suggest that conflict has a strong negative spillover effect on directly contiguous countries growth, but no significant impacts were observed for non-contiguous countries. When economic and political factors are considered, this result remains, but the spillover effect is smaller. While the impact of conflict remains devastating, it is important to take other factors into account as studies using only geographical distance may be overestimating the impact on neighbours. The fourth chapter examines the determinants of civil war, using a zero-inflated modelling approach to deal with excess zeroes in the dependent variable. Traditional probit and logit models have limited capacity in dealing with this issue and can create misleading results, which is illustrated through replicating published work. A general greed-grievance model is then estimated giving further support to using zero-inflated models. While the standard probit models tend to emphasise opportunity variables, consistent in other studies, the zero inflated model gives supports both opportunity and grievance variables. In particular, ethnicity, democracy and inequality are found to play a significant role in civil war prevalence. Finally, chapter five summarises the findings of the dissertation, providing some policy recommendations, concluding remarks and discusses future research opportunities.
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    Military expenditure and economic growth: A survey
    (The Economics of Peace and Security Journal, ) Dunne, John Paul; Tian, Nan
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    The impact of domestic savings, financial depth, and financial innovation on economic growth in sub-Saharan African countries
    (2025) Macauley, Rachel; Abraham, Haim
    This thesis empirically examines issues related to the impact of the financial sector on economic growth. Specifically, the three papers of this thesis presented in separate chapters are: 1) domestic savings and economic growth, 2) financial depth and economic growth, and 3) financial innovation and economic growth. The first paper: ‘Domestic savings and economic growth' investigates the threshold effect of domestic savings on economic growth in the Sub Saharan African (SSA) countries. This paper examines at what point do excessive domestic savings have detrimental effects on economic growth and in which cases can domestic savings be classified as excessive domestic savings. The dynamic panel threshold model is employed to empirically examine the threshold effect of domestic savings on economic growth. Using data from 35 SSA countries between the period of 1980 and 2022, this study concludes that there is a threshold effect in the relationship between domestic savings and economic growth. This means that domestic savings promote economic growth if domestic savings are below the threshold. Conversely, domestic savings may have positive but insignificant effects on economic growth if they are above the threshold. However, the threshold effects on economic growth are dynamic, it should be revised as countries move from one income level to another, for instance low-income countries may move to a middle-income or upper-income category, which may increase the countries' domestic saving rates and may require higher thresholds. The second paper: ‘Financial depth and economic growth' examines the impact of financial depth on economic growth in Ebola-affected SSA countries, namely Liberia, Sierra Leone and Guinea. This paper examines the impact of financial depth on economic growth before-during-and-after a public health crisis. To get a clear picture on whether the Ebola period resulted in different dynamics in the relationship between financial depth and economic growth, this study examines two samples: the full sample (spanning from 1980 to 2022 comprises of the pre-and-post Ebola and COVID-19 eras) and the pre-Ebola era (1980 – 2014 which excludes the public health crisis period). The results show that the positive relationship between financial depth and economic growth in the pre-Ebola period is stronger than in the full sample. This difference means that financial depth significantly promoted economic growth before the public health crisis, and that the Ebola crisis did not only claim lives but also impacted the financial depth–economic growth relationship. Therefore, the main finding of this study is that financial depth positively impacts economic growth; however, infectious diseases such as Ebola can disrupt the relationship. The Granger causality results depict that a unidirectional causality from financial depth to economic growth is found in Guinea and Liberia while a bidirectional relationship exists between financial depth and economic growth in Sierra Leone. The third paper: ‘Financial innovation and economic growth' considers the symmetric (same magnitude) and asymmetric (different magnitude) impacts of financial innovation on economic growth in SSA countries. The asymmetric impact, unlike the symmetric impact, decomposes financial innovation into positive and negative components to examine how economic growth reacts to these components of financial innovation. This study employs the linear autoregressive distributed lag (ARDL) model to test for the symmetric relationship between financial innovation and economic growth. The non-linear autoregressive distributed lag (NARDL) model tests for the asymmetric relationship between the two variables. Using data from 20 SSA countries between the period of 1990 and 2020, this study concludes that financial innovation has a symmetric impact on economic growth in SSA, the relationship is positive and statistically significant in the long-run. The result of the asymmetric impacts of the two variables shows that an increase in financial innovation has a positive and significant impact on economic growth in both the short-run and long-run. In the long-run, a decrease in financial innovation has a negative asymmetric relationship with economic growth.
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    The impact of FDI on economic growth in South Africa: Does the sector matter?
    (2024) Keleme, Mamontshi Gwendoline; Biekpe, Nicholas
    Foreign Direct Investment (FDI) is crucial for wealth-creating economic growth. Conceptually, FDI could bridge the investment gap and raise much-needed revenue for South Africa's financial requirements. However, much of the existing evidence on the effects of FDI on economic growth is at the macro level, with scant attention focused on the impact of FDI on economic growth at sector levels in South Africa. Consequently, this study aimed to examine the impact of agricultural, manufacturing, mining, construction, finance, and transport FDI on economic growth for the period 1993 to 2019 in South Africa. The study used panel data to estimate the relationship between the FDI-to-GDP ratio and economic growth. The Panel ARDL results revealed that the effect of sectoral FDI on national GDP was positive but insignificant in the long- and short-run. In addition, the results revealed that domestic investment had a negative and significant effect on growth in the long and short run, at 5% and 10% significant levels, respectively. In line with previous studies, all other variables, such as human capital, trade openness, and total consumption expenditure, had excepted signs in the short run. However, all variables were statistically significant in the long run and had unexpected signs. The short-run PMG result shows that FDI inflows into the construction, mining, and transport sectors had a significant positive relationship with the economic growth rate. In contrast, the FDI inflow in the agriculture, finance and manufacturing sectors had a significant negative relationship with economic growth.
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    The relationship between financial sector development and economic growth: the case of Zambia
    (2025) Mwachande, M'khuzo; Albertus, Rene
    This study examines the relationship between financial sector development and economic growth in Zambia, focusing on the roles of financial sector growth, bank efficiency, human capital, and institutional quality. Given Zambia's ongoing financial reforms, the research aims to fill the gap in understanding how these factors influence economic performance, particularly in the short and long term. The problem addressed by the study is the unclear impact of financial sector reforms on economic growth, despite substantial progress in financial sector development. The study's objectives were to estimate the short- and long-run relationships between financial sector development and economic growth, analyse the effect of bank efficiency on financial sector development, and explore the moderating influence of human capital and institutional quality. The results, derived from the ARDL model, indicate that financial sector development has a positive long-term relationship with economic growth, with no significant short-term effects. While improvements in bank efficiency were found to be positively associated with financial sector development in the long run, no substantial short-term impact was observed. Human capital and institutional quality did not show significant effects on economic growth or bank efficiency, suggesting that these areas need further development for full economic benefits. The study concludes that while financial sector development plays a critical role in driving long-term economic growth, improvements in human capital and institutional quality are necessary to enhance the sector's effectiveness. The findings offer valuable insights for policymakers seeking to strengthen Zambia's financial sector and achieve sustainable economic growth. Further research is recommended to explore the delayed effects of financial reforms, the role of financial technology, and the impact of institutional quality on economic outcomes.