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The Determinants of Import Demand in South Africa: An Empirical Investigation

Author

Listed:
  • Nomfudo P. Vacu

    (Department of Economics, University of South Africa, Pretoria, South Africa)

  • Nicholas M. Odhiambo

    (Department of Economics, University of South Africa, Pretoria, South Africa)

Abstract
This study uses the autoregressive distributed-lag (ARDL) estimation approach to investigate the key drivers of import demand in South Africa for the period 1985 to 2015. Unlike other previous studies, the study estimates four models: aggregate import demand, import demand for consumer goods, import demand for intermediate goods, and import demand for capital goods. The overall results show that aggregate import demand is positively determined by investment spending, consumer spending and relative import price, but negatively determined by government spending, both in the short run and in the long run. Other results show that: 1) foreign exchange reserves have a negative long-run impact on import demand; 2) trade liberalisation policy has a positive impact on aggregate import demand in the long run and a negative impact in the short run; and 3) exports of goods and services in the previous period have a positive short-run impact on import demand. In terms of consumer goods, import demand is positively determined by trade liberalisation policy in the long run, but only positively and negatively determined by foreign exchange reserves and trade liberalisation policy in the short run, respectively. In terms of intermediate goods, import demand is found to be positively determined by government spending, consumer spending and trade liberalisation policy, but negatively determined by relative import price, both in the short run and long run. In terms of capital goods, import demand is found to be negatively determined by foreign exchange reserves, both in the short and long run; while relative import price and exports of goods and services are found to have a long-run and short-run positive impact, respectively. Le determinanti della domanda di importazioni in Sud Africa: un’analisi empirica Questo studio analizza le determinanti della domanda di importazioni in Sud Africa nel periodo 1985-2015 tramite il modello ARDL. Sono presi in considerazione 4 modelli: domanda aggregata di importazioni, domanda di importazione di beni di consumo, domanda di importazione di beni intermedi e domanda di importazione di capitali.

Suggested Citation

  • Nomfudo P. Vacu & Nicholas M. Odhiambo, 2020. "The Determinants of Import Demand in South Africa: An Empirical Investigation," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(1), pages 51-76.
    • Handle: RePEc:ris:ecoint:0863
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    References listed on IDEAS

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    2. Nicholas Odhiambo, 2010. "Interest rate reforms, financial deepening and economic growth in Tanzania: a dynamic linkage," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(2), pages 201-212.
    3. Adel Shakeeb MOHSEN, 2020. "Trade Liberalization and International Trade: A Case Study of China," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 4(1), pages 1-14.
    4. Itumeleng Pleasure Mongale & Tumelo Mashamaite & Nyiko Khoza, 2018. "Household savings, financing and economic growth in South Africa," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(1), pages 105-116, January.
    5. Uddin, Gazi Salah & Sjö, Bo & Shahbaz, Muhammad, 2013. "The causal nexus between financial development and economic growth in Kenya," Economic Modelling, Elsevier, vol. 35(C), pages 701-707.

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    • F10 - International Economics - - Trade - - - General

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