Determinants of Economic Growth for Southern African Development Community Nations: A Panel Data Approach

Proceedings of The 15th International Conference on Modern Research in Management, Economics and Accounting

Year: 2023



Determinants of Economic Growth for Southern African Development Community Nations: A Panel Data Approach

Thomas Musora, Florence Matarise




It is critical to identify growth factors in order to effectively estimate economic growth. However, Africa and particularly the Southern African Development Community (SADC) region, have not identified any determinants of economic growth that are unique to the SADC region. In this study, the determinants of economic growth are gathered and assessed for sixteen SADC countries over a twenty-two-year period (2000-2021), requiring the use of panel data analysis, where we can have group effects, temporal effects or both. Data on different SADC countries contributing to the global economy is obtained from a variety of sources, but primarily the World Bank website. This article compared the ordinary least squares (OLS) model, fixed effects model (FEM) and random effects model (REM) for panel data from SADC countries. The F-test was employed as a specification test to choose between the OLS model and the FEM, the Breusch-Pagan test was used to choose between the OLS and the REM and the Hausman test to choose between the FEM and the REM. The fixed-effects model with an adjusted R2 value of 98% was realised to be the best model to handle SADC community economic data. Imports, exports, external debt, international reserves, unemployment and labour force had positive impacts on the SADC community’s economic growth. Foreign direct investment negatively influenced economic growth. Inflation, exchange rate and interest rate had no association with economic development for the SADC community. As for country effects, it was established that South Africa had a positive impact on GDP, whereas all other SADC nations’ country effects negatively affected economic growth with the exception of Comoros and Seychelles, whose effects had no significant effects on economic growth.

keywords: Economic Growth; SADC; Gross domestic product; Panel data analysis; Specification test; Adjusted R2 value.