Departmental Papers

The Mystery of Missing Real Spillovers in Southern Africa: Some Facts and Possible Explanations

By Olivier Basdevant, Andrew W Jonelis, Borislava Mircheva, Slavi T Slavov

June 4, 2014

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Olivier Basdevant, Andrew W Jonelis, Borislava Mircheva, and Slavi T Slavov. The Mystery of Missing Real Spillovers in Southern Africa: Some Facts and Possible Explanations, (USA: International Monetary Fund, 2014) accessed September 19, 2024

Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Anecdotal evidence suggests that the economies of South Africa and its neighbors (Botswana, Lesotho, Mozambique, Namibia, Swaziland, and Zimbabwe) are tightly integrated with each other. There are important institutional linkages. Across the region there are also large flows of goods and capital, significant financial sector interconnections, as well as sizeable labor movements and associated remittance flows. These interconnections suggest that South Africa’s GDP growth rate should affect positively its neighbors’, a point we illustrate formally with the help of numerical simulations of the IMF’s GIMF model. However, our review and update of the available econometric evidence suggest that there is no strong evidence of real spillovers in the region after 1994, once global shocks are controlled for. More generally, we find no evidence of real spillovers from South Africa to the rest of the continent post-1994. We investigate the possible reasons for this lack of spillovers. Most importantly, the economies of South Africa and the rest of Sub-Saharan Africa might have de-coupled in the mid-1990s. That is when international sanctions on South Africa ended and the country re-integrated with the global economy, while growth in the rest of the continent accelerated due to a combination of domestic and external factors.

Subject: Business cycles, Economic growth, Education, Exports, Financial sector policy and analysis, Imports, International trade, Spillovers

Keywords: Africa, BLMNSZ dummy, Business cycles, Center, DP, DPPP, Exports, GDP, Global, Growth impact, Imports, Real GDP, Real GDP growth, SA bank, Southern Africa, Spillovers, Sub-Saharan Africa, Swaziland, World GDP

Publication Details

  • Pages:

    39

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Departmental Paper No. 2014/006

  • Stock No:

    MMRSSAEA

  • ISBN:

    9781484363447

  • ISSN:

    2616-5333