Export, Import and Growth Nexus for South Africa: ARDL for Cointegration and Granger Causality

In this study we examine the relationship between export, import and economic growth (GDP) in South Africa. We conduct an empirical analysis using time series data covering the period between 1961 and 2017. We use the ARDL bounds testing approach for testing for co-integration. Also we follow the Toda-Yamamoto procedure of testing for Granger causality. The results show that there is a long run relationship between exports, imports and GDP and that there is a unidirectional causality running from export to GDP suggesting that ELG hypothesis holds for South Africa. Therefore, it is important for economic policy makers to put more efforts in export promotion since it has the potential to increase growth and lead to the country’s economic development in the long run.