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A GROWTH MODEL FOR SOUTH AFRICA
Author(s) -
Rattsø Jørn,
Stokke Hildegunn E.
Publication year - 2007
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2007.00140.x
Subject(s) - economics , counterfactual thinking , endogenous growth theory , productivity , protectionism , investment (military) , growth model , sanctions , consumption (sociology) , convergence (economics) , capital accumulation , growth theory , macroeconomics , international trade , human capital , economic growth , neoclassical economics , epistemology , social science , philosophy , sociology , politics , political science , law
We examine the South African growth experience during 1960‐2005 using an intertemporal growth model. The model combines old growth theory investment dynamics and new growth theory endogenous productivity growth. The consumption and investment decisions are intertemporal and assume open capital markets. Structural change is captured by separating the traded and nontraded sectors, and sectoral productivity growth is determined in a barriers‐to‐growth framework. Calibration of the model shows how the growth experience combines neoclassical convergence, technology spillovers with barriers and productivity‐investment interaction. Counterfactual analysis shows the growth costs of sanctions and protectionism. The suggested model is an alternative to existing growth modelling in South Africa, in which investments are short‐sighted and productivity growth is imposed exogenously.