Joel Hinaunye Eita

Determinants of South Africa’s Exports of Leather Products

ABSTRACT This article analyses the determinants of South African exports of raw hides and skins (other than fur skins) and leather (H41) using annual data covering the period 1999 to 2008 for 32 main trading partners. The results show that the importers gross domestic product (GDP), South Africas GDP, the importers infrastructure, the real effective exchange rate and some regional trade agreements are the main determinants of raw hides and skins (other than fur skins) and leather exports. The article then investigates if there is unexploited trade potential. The investigation reveals that among the sample countries – namely; Australia, France, India, Indonesia, Italy, Japan, Mexico, Singapore, South Korea, Turkey, the United Arab Emirates (UAE), the United Kingdom (UK) and the United States of America (US) have unexploited export potential. It is important from a policy perspective to focus on the unexploited trade potential (in the above-mentioned trading partners) to accelerate growth and alleviate poverty in South Africa.

Empirical test of the Ricardian Equivalence in the Kingdom of Lesotho

Abstract The objective of this paper is to test the existence of Ricardian Equivalence in Lesotho using annual data for two sample periods, 1980–2014 and 1988–2014. This proposition is important and has crucial implications for tax policy. Household consumption, government debt, government expenditure, GDP per capita, population growth and inflation are variables which are used for this analysis. The study used ARDL cointegration approach to investigate the relationship between these variables. The study found that there is long run equilibrium relationship among the variables in two sample periods. The results show that an increase in government debt or government expenditure will decrease household consumption per capita. This implies that the Ricardian Equivalence does hold for Lesotho. The results also imply that fiscal policy is an ineffective tool to stabilize the economy. Lesotho has limited fiscal flexibility, and it will be difficult or challenging to increase private consumption and economic growth, particularly during economic downturn.

Estimating export potential for a small open economy using a gravity model approach: evidence from Namibia

ABSTRACT:Exports are the drivers of economic growth in Namibia. Given their importance in the economy, it is necessary to analyse factors that are determining export flows between Namibia and its trading partners. A gravity model is very important in the analysis of bilateral trade flows, and has proven to be a useful tool in determining trade or export potential of a country. The purpose of this study is to investigate factors that determine exports of Namibia using a gravity model approach. Panel data econometric technique was used to estimate the gravity model for Namibia. The analysis covers the period 1998–2012 and uses annual data. Pooled effects, fixed effects and random effects models were estimated. The LM and F-test statistics were used to test for poolability of the cross-sections. Poolability was rejected in favour of heterogeneity among the cross-sections. Haussman test was used to determine whether fixed or random effects is the appropriate model. The results showed that fixed effect is the appropriate model. The analysis indicates that increases in importer’s GDP and Namibia’s GDP cause exports to increase, while distance and importer’s GDP per capita are associated with a decrease in exports. Namibia’s GDP per capita and real exchange rates do not have an impact on export. Namibia exports more to countries where it shares a common border and SADC as well as to the European Union. The study shows that there is unexploited export potential to among others, Australia, Belgium, Kenya, Mauritius, Netherlands, Portugal, South Africa and Switzerland. These results are important for trade policy formulation in order ensure that Namibia’s export potential is exploited in order to enhance economic growth and generates employment. Trade promotion activities should be directed to that have unexploited potential.

Supply and demand macro-econometric model of a small economy: evidence from Namibia

ABSTRACT This study develops a macro-econometric model for the Namibian economy. This macro-econometric model estimates both the demand and supply sides of the Namibian economy. This model incorporates the price sector, in order to serve as a link between the supply and demand sides of the economy. The model consists of behavioural equations, linked by identities and definitions. These behavioural equations were estimated and simulated individually. They were then combined together to form a full macro-econometric model of the Namibian economy. The full macro-econometric model was closed using two models. The first model activates the supply side and marginalises the demand side. The second model is demand side orientated, which activates the demand side and marginalises the supply side. The results indicate that the estimated values closely approximate the actual values. This macro-econometric model can be used to apply policy simulations, in order to determine appropriate economic policies for Namibia.

The effects of exchange rate changes on Sub-Saharan Africa trade

This study investigates the impact of exchange rate changes on imports, exports and trade balance in Sub-Saharan Africa (SSA). The results indicate that there is a positive relationship between exchange rate changes and imports, albeit the degree of responsiveness was extremely low. These were inconsistent with economic theory and can be attributed to the fact that many African countries largely depend on imports, and tend to be invariant to exchange rate changes. Hence, a depreciation of their exchange rates may have little or no effects on imports. The study recommends that SSA authorities draw up strategies and programs that will make the economies less reliant on imports. The significant negative relationship found between exchange rate changes and exports suggests that the policy of exchange rate depreciation may not have the desired effects of boosting exports. The study found no significant relationship between exchange rate changes and trade balance.