Exploration of the relationship between economic development and inclusive growth in South Africa

Abstract

Issues such as inequality, collapsed state capacity, and spatial exclusion, particularly in South Africa, affect economic development negatively. This study aims to assess the relationship between inclusive growth and economic development and employs the autoregressive distributed lag (ARDL) approach in annual time series data ranging from 1990-2022. Data were obtained from the South African Reserve Bank and the World Bank. The findings of this study reveal that, in the long run, a percentage change in gross fixed capital formation will positively affect economic development by 44%. Similarly, in the short term, a percentage change in gross fixed capital formation will affect economic development by 33%. Lastly, trade openness has an insignificant impact in the short run and long run. In addition, the error correction term coefficient is negative and significant. The implication is that the economic development model has a speed of adjustment of about 11% to reach equilibrium. This study improves the understanding of the link between economic development and inclusive growth, contributing to academia and policymaking for more equitable and sustainable economic development. This study explores the impact of inclusive growth on South Africa's economic development, offering recommendations for policy formulation to promote equitable benefit distribution across various social segments

Keywords

• inclusive growth
• economic development
• autoregressive distributed lags
• south africa.