East Asia and its potentials in boosting economic growth in developing economies: the case of Africa

Using threshold cointegration and error-correction model, this paper has investigated the channels through which Africa (proxied by South Africa) can boost its economic growth via its trade with East Asia (represented by China). The results support threshold cointegration and non-linear adjustments in the relationship between South African economic growth and the nature and level of its imports of capital goods from China. In contrast, the findings provide no support for the idea that exporting to China is a particularly beneficial conduit of faster productivity growth. In other words, the findings suggest that the impact of technical progress on Africa's economic growth rates is labour augmenting, and that learning-by-importing externalities have the potential for generating economic growth in Africa. Eventually, exports of primary commodities are likely to result in static effects, since they might raise GDP once for all (a level effect) without increasing the rate of growth of GDP in the long run (a growth effect).