An Analysis of the Relationship between Manufacturing Growth and Economic Growth in South Africa: A Cointegration Approach
This paper examines the relationship between manufacturing growth and economic growth in South Africa using quarterly data ranging from 2001 to 2014. The paper employed the Johansen cointegration to test the Kaldor’s hypothesis. The Johansen cointegration results revealed that there is a long run relationship between GDP, manufacturing, service and employment. The Granger causality results revealed that there is a unidirectional causality running from manufacturing growth to GDP growth. The overall findings of the study confirm that Kaldor’s first law of growth is applicable in South African economy. Therefore, investment strategies and policies should be alignment towards promoting growth in the manufacturing sector in order to boost the economic growth of South Africa.
 Adugna, T. (2014). Impacts of Manufacturing Sector on Economic Growth in Ethiopia: A Kaldorian Approach. Journal of Business Economics and Management Sciences, Vol. 1(1), pp. 1-8.
 Castiglione, C. (2011). Verdoorn-Kaldor’s law: An empirical analysis with time series data in the United States. Advances in management and applied economies. Vol. 1. No. 3, pp. 135-151.
 Dasgupta, S., and Singh, A. (2006). Manufacturing, services and premature deindustrialisation in developing countries: A Kaldorian empirical analysis. ESRC Centre for Business Research, University of Cambridge.
 Dickey, D., and Fuller, W. (1979). Distribution of the Estimators for Autoregressive Time Series with a Unit Root, Journal of the American Statistical Association, Vol. 74, pp. 427-431.
 Fourie, C.V.N., and Burger, P. (2009). How to think and reason in macroeconomics, 3rd edition, Juta & co Ltd. Claremont.
 Gujarati, D.N. (2004). Basic Economics, 4th edition, MacGraw-Hill companies: New York.
 Johansen, S. (1991). Estimation and hypothesis testing of cointegration vectors in Gaussian vector autoregressive models. Econometrica, 59, pp. 1551-1580.
 Kaldor, N. (1966). Causes of the Slow Rate of Economic Growth of the United Kingdom. Cambridge University Press: Cambridge.
 Kaldor, N. (1967). Strategic Factors in Economic Development. New York State School of Industrial and Labour Relations, Cornell University: Ithaca NY.
 Ray, P. (2008). Commercial banks and monetary policy in India. Business and economics. Vol. 1, pp. 279.
 Lankauskiene, T., and Tvaronaviciene, M. (2013). Economic sector performance and growth: Contemporary approaches in the context of sustainable development. Intellectual Economics, Vol. 7, No. 3(17), pp. 355-374.
 Millin, M., and Nichola, T. (2005). Explaining economic growth in South Africa: A Kaldorian approach. International Journal of Technology and Sustainable Development, Vol. 4, pp. 47-62.
 Sheridan, B.J. (2014). Manufacturing export and growth: When is a developing country ready to transition from primary export to manufacturing export? Journal of Macroeconomics, Vol. 42, pp. 1-13.
 Statistics South Africa. (2014). South Africa’s key sectors contributing to GDP. Retrieved from statistics South Africa website: http://beta2.statssa.gov.za/?page_id=735&id=1
 Tregenna, F. (2008). The contributions of manufacturing and services to employment creation and growth in South Africa. South African Journal of Economics, 76(s2), pp. S175-S204.
 Yellow, R. (2010). The importance of economic growth. Retrieved from: http://www.worldissues360.com/index.php/the-importance-of-economic-growth-2-10386
 Wang, M. (2009). Manufacturing FDI and economic growth: Evidence from Asian economies. Applied Economics, 41(8), pp. 991-1002.
 Zakrajsek, E. (2009). Cointegration: Basic ideas and key results. Divisions of Monetary Affairs. Federal Reserve Board. University of Ljubljana.
 Zalk, N. (2014). What is the role of manufacturing in boosting economic growth and employment in South Africa? Reviewed from: http://www.polity.org.za/article/what-is-the-role-of-manufacturing-in-boosting-economic-growth-and-employment