Export diversification and economic growth: evidence from the Southern African Development Community (SADC) states

Abstract

This study employs a panel data regression growth model to empirically investigate the relationship between export diversification and economic growth in the Southern African Development Community (SADC) region for the period 1995 to 2020. We employ two measures of diversification namely, the diversification index and the concentration index. The control variables that are thought to influence economic growth include; capital, trade openness, direct investment and population growth. The study results found strong evidence in support of the export diversification-led growth hypothesis for the SADC region. The results imply that exports can play key role in the SADC region’s economic growth strategy. The study recommends that SADC countries should put in place policies that should diversify exports in the SADC region. Export diversification will allow SADC countries which are traditionally commodity exporters to hedge against volatile international commodity prices. It will also allow SADC states to stabilize their export revenues. Diversification of exports is critical in achieving stable GDP growth, job creation and stable export earnings in the SADC region.