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Testing Capital Accumulation-Driven Growth Models in a Multiple-Regime Framework: Evidence from South Africa

Author

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  • Kevin S. Nell

    (Center for Economics and Finance, University of Porto)

  • Maria M. De Mello

    (Center for Economics and Finance, University of Porto)

Abstract
This paper proposes two types of AK-style endogenous growth models to test the physical capital accumulation hypothesis in a ‘typical’ developing country with multiple regimes: a strong version, in which technological progress is fully endogenous to capital accumulation, and a weaker version, where technological progress and capital accumulation are complementary factors in the growth process. The empirical application supports the relevance of the weaker version across South Africa’s ‘faster-growing’ regime (1952-1976) and ‘slower-growing’ regime (1977-2012). To improve the economy’s post-2012 growth performance on a sustainable basis, the simulation exercise suggests a refined set of policies that simultaneously attracts foreign direct investment and raises the domestic saving/investment rate. Thus, to re-ignite the complementary relationship between technological progress and capital accumulation in the South African economy, both sources of growth should feature prominently in the initial decision-making process of policymakers.

Suggested Citation

  • Kevin S. Nell & Maria M. De Mello, 2015. "Testing Capital Accumulation-Driven Growth Models in a Multiple-Regime Framework: Evidence from South Africa," CEF.UP Working Papers 1501, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:cetedp:1501
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    References listed on IDEAS

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    More about this item

    Keywords

    AK model; multiple regimes; growth transitions; physical capital accumulation; technological progress; foreign direct investment; South Africa; time-series econometrics;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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