AN EMPIRICAL TEST OF EXOGENOUS GROWTH MODELS: EVIDENCE FROM THREE SOUTHERN AFRICAN COUNTRIES

Abstract

This paper aims to empiri-cally investigate the relevance of exogenous growth models to explaining economic growth in three Southern African countries, using the ARDL bounds-testing approach. In addition, the relevance of the conver-gence hypothesis in these study countries is tested using an extended exogenous growth model. The study results reveal that the pre-dictions of the Solow and augmented Solow growth models are consistent in the three study countries, and that the convergence hypothesis holds. However, when addition-al factors are taken into account in exoge-nous growth models, the response of income per capita due to changes in investment and human capital development is slow in economies with low income per capita, such as Malawi and Zambia, compared to South Africa, which is ranked as an economy with a high income per capita. This study has im-portant policy implications in these study countries. These implications include the need for policymakers to ensure that mac-roeconomic stability is encouraged by re-ducing government consumption, inflation, and population growth; and by promoting trade in order to allow for the diffusion of technologies from abroad.