Nature and Performance of the South African Economy

The South African economy exhibited a comparatively favourable performance from the mid-1990s to the mid-2000s, albeit with growth that lagged behind that of comparable economies (particularly those that this book compares South Africa with). This is due to a variety of factors, including inadequate levels of savings and investment, as well as the economic structure of South Africa. The chapter examines the impact of the primary drivers of the South African economy by employing the autoregressive distributed lag (ARDL) econometric method. We utilised the cointegration test and the vector error correction (VEC) model to examine the long-run relationship. The findings indicate that exports, investment and consumption are crucial determinants of economic development in South Africa. Regardless of the time horizon, this remains true. From a policy perspective, it is advisable for the government to take measures to stimulate increased exports and investment in the economy. Additionally, the findings indicate that aside from national income identity variables, other factors that have the potential to impede economic development should be taken into consideration. In particular, the structure of the South African economy should be transformed (which is the central thesis of this book).