The causal relationship between exports and economic growth in the nine provinces of South Africa : evidence from panel-Granger causality test

Abstract

This paper examines the causal relationship between exports and growth in nine provinces of South Africa for the period 1995-2011, using panel causality analysis, which accounts for cross-section dependency and heterogeneity across regions. Our empirical results support unidirectional causality running from economic growth to exports for Mpumalanga only; a bi-directional causality between exports and economic growth for Gauteng; and no causality in any direction between economic growth and exports for the rest of provinces. This suggests that export expansion might not be an efficient strategy to improve provincial economic performance in South Africa as neither exports nor economic growth is sensitive to each other in almost all provinces.