External Financing Sources and Economic Growth: A PARDL Approach to Selected SADC Countries

The study investigates the relationship between economic growth and external financing sources using panel data of selected SADC countries. The models used revealed that official development assistance (ODA) is significant and negatively related to economic growth in the long-run. The short-run results revealed a negative impact, and an insignificant relationship between ODA and economic growth. Foreign direct investment and personal remittances are positively linked to economic growth, with only personal remittances significantly related. External debt has been the main deterrent to economic growth in SADC countries. The acceleration of financial development and trade openness creates an environment that augments the mobilisation efforts of both external and domestic sources of financing to grow the SADC community. The study recommends that SADC must capitalise on the personal remittances variable as a significant driver of economic growth. Acceleration of human capital investment and investments in technology is crucial in SADC. The results also revealed that ODA significantly deters growth in the SADC region with or without governance indicators. Promoting trade openness and financial development can capitalise on the mobilisation efforts of both external and domestic financing sources to spur economic growth in the SADC region.