A comparative analysis of the impact of merchandise exports versus services exports on economic growth for the SACU region
A comparative analysis of the impact of merchandise exports versus services exports on economic growth for the SACU region

Summary/Abstract: International trade is one of the critical drivers of the global economy. Many countries have successfully facilitated rapid growth via theexport-led growth nexus. Diversification and specialisation are essentialcomponents of exports. This paper focuses on diversificationand the role of merchandise exports versus service exports on economicgrowth in a developing region, namely the Southern AfricanCustoms Union (SACU). This region has experienced low growth overthe last decade and requires different strategies to re-ignite growth.A quantitative methodology was selected to assess the differencein the impact of merchandise exports versus service exports, usingFisher-Johansen cointegration panel time series data, FMOLS andDOLS regressions, and Granger causality analysis from 1990 to 2019.Economic growth was used as the dependent variable with merchandiseexports, service exports, gross fixed capital formation, and thelabour force as independent variables in three different models. Theresults indicated a cointegrating long-run relationship between all thevariables and that merchandise exports had the highest impact oneconomic growth. Granger causality tests also found that exportscause changes in economic growth and that service exports causechanges in merchandise exports. The study found support for exportledgrowth as a means by which to re-ignite economic growth in theregion;an export-focused development strategy is required in order tofacilitate export diversification with a focus on improvingvalue-addedmerchandise exports and the development of service exports via incentives.

• Details
• Contents