Domestic Demand or Trade Led Growth Hypothesis For Southern Africa Development Community (SADC) Countries? A Search For A New Development Paradigm.

Abstract:

There have been weaker growth rates, globally, being

coupled with an increase in trade protectionist policies, fall in

commodity prices, and high economic uncertainty in developed

nations. Developing countries face weak external positions due to

overreliance on trade to improve growth. In this context, this study uses

the Auto Regressive Distributed Lag (ADRL) approach to evaluate the

applicability of the trade led and domestic demand led growth (DDLG)

hypothesis using a sample of 12 SADC countries over the period 1994-

2019. The DDLG hypothesis is more applicable over both the short and

long run. The exports led growth hypothesis is not applicable while the

imports explain growth in the long run. There is joint causality from

domestic demand and imports to growth. Individual countries adjust to

the long-run equilibrium at different speeds, which confirms short-run

heterogeneity while long-term outcomes converge. The study offers

some policy implications

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