Impact of Trade Dynamics on Economic Growth in SADC Strata

Abstract

This study investigates the relationship between trade ratios and economic growth within the Southern African Development Community (SADC), focusing on how varying trade dynamics impact economic performance across different country categories. Utilizing dynamic fixed effects regression analysis, the study quantifies the significance of total trade, exports, imports, and trade-in-service ratios on GDP growth. Major findings reveal a positive and statistically significant impact of exports to GDP ratios on economic growth, with a parameter estimate of 0.572, particularly in non-CMA and coastal countries. In contrast, imports to GDP ratios demonstrate a negative relationship, with an estimated -0.314, highlighting the detrimental effects of import dependency. The analysis also shows that manufactured imports negatively impact growth, with a parameter estimate of -0.271. In contrast, agricultural raw material imports can facilitate growth in landlocked nations, indicated by an estimate of 0.342. The study concludes that fostering export-oriented strategies and enhancing local production capabilities are essential for sustainable economic growth. Given these empirical results, policymakers should harmonise trade dynamics by promoting high-value exports, reducing reliance on manufactured imports, and supporting agricultural sectors to enhance overall economic resilience in the SADC region.