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An Empirical Analysis of Africa Continental Free Trade Area Economic Growth Prospects in the SADC Region: Evidence Using Autoregressive Distributed Lag-PMG Estimation Techniques

Author

Listed:
  • Ngonidzashe Chiranga

    (North-West University (NWU), Potchefstroom, South Africa; & Department of Economics, Faculty of Economics and Finance, Tshwane University of Technology (TUT), Polokwane, South Africa)

  • Teboho J. Mosikari

    (Department of Economics, Faculty of Economic and Management Sciences, North-West University (NWU), Mmabatho, South Africa)

  • Mulatu F. Zerihun

    (Department of Economics, Faculty of Economics and Finance, Tshwane University of Technology (TUT), Ga-Rankuwa, South Africa)

Abstract

Inter-SADC trade relations of indebted small countries and their potential of ushering economic growth from AfCFTA are unclear in both the short and long run. The study aims to empirically examine if there are AfCFTA economic growth prospects for SADC nations in the short and long term through an examination of the trade openness-economic growth nexus, and how the external debt impacts economic growth. A panel of eight SADC countries is used from a period spanning 1996-2022. The study employs Autoregressive Distributed Lag (ARDL) and the Pooled Mean Group (PMG) estimation techniques. The findings suggest that trade openness impacts economic growth positively at the 1% level in the long run, whereas external debt impacts economic growth negatively at the 1% level in both the long and short run. The study also finds that causality runs from economic growth to trade openness and is unidirectional. SADC nations are urged to minimise the overreliance on external debt in the funding of domestic consumption needs as it has negative consequences on economic growth in the long term.

Suggested Citation

  • Ngonidzashe Chiranga & Teboho J. Mosikari & Mulatu F. Zerihun, 2024. "An Empirical Analysis of Africa Continental Free Trade Area Economic Growth Prospects in the SADC Region: Evidence Using Autoregressive Distributed Lag-PMG Estimation Techniques," International Journal of Economics and Financial Issues, Econjournals, vol. 14(6), pages 211-218, October.
    • Handle: RePEc:eco:journ1:2024-06-23
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    References listed on IDEAS

    as
    1. Salamatu Bellah Conteh & Yuan Yijun & Brima Sesay, 2021. "Economic Growth Effects of the Interaction of Trade Openness and Institutions Quality: Empirical Evidence from Sub-Saharan Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 11(1), pages 34-48.
    2. Alexandr Akimov & Albert Wijeweera & Brian Dollery, 2009. "Financial development and economic growth: evidence from transition economies," Applied Financial Economics, Taylor & Francis Journals, vol. 19(12), pages 999-1008.
    3. Wajdi Bardi & Mohamed Ali Hfaiedh, 2021. "International trade and economic growth: evidence from a panel ARDL-PMG approach," International Economics and Economic Policy, Springer, vol. 18(4), pages 847-868, October.
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    More about this item

    Keywords

    Africa Continental Free Trade Area; Autoregressive Distributed Lag; Economic Growth; Southern African Development Community;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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