Economic Growth and Governance in South Africa : Empirical Examination of Gross Domestic Product and Selected Governance Indicators

The paper sought to examine economic growth and governance in South Africa using GDP and selected governance indicators. The estimation techniques employed to achieve the research aim are; Autoregressive Distributed Lag (ARDL) and granger-causality approaches. The Augmented Dickey Fuller (ADF) unit root tests reveal that all variables are co-integrated at I(1), except for CC at I(2). The ARDL results ascertain the existence of a long run relationship among the variables, hence, the F-statistic is greater than the lower and upper critical bounds. The Granger-causality tests show a causal link between government effectiveness (GE) and gross domestic product (GDP). Corruption control (CC) was found to have a causal link with GE. In addition, the diagnostic tests confirm that the findings are reliable and valid. Accordingly, these findings are consistence with the widely shared notion that good governance is an impetus for economic growth and development. In essence, where poor governance thrives, it becomes difficult to practice good governance and to achieve prospects of economic growth. Therefore, appropriate governance mechanisms must be implemented in order to enhance sustainable good governance and economic growth. This calls for what this paper terms as a growth-enhancing' governance model.