The Effects of Industrialisation on Economic Growth: Panel data evidence for SADC countries

Abstract

Drawing on balanced panel data of 6 Southern African countries in 1978–2019, this paper examines the impact of industrialisation on economic growth using several econometrics methods: pooled mean group, mean group, dynamic fixed effects and takes account of common correlated effects. Estimation is conducted using manufacturing value added as the proxy for industrialisation. Empirical results reveal that an increase in industrialisation is positively associated with economic growth in both the short and long-run and the positive relationship is more significant when we use common correlated factors to address the issue of cross-sectional dependence. The policy implications of this research are that industrialisation remains one of the important tools of economic transformation in Southern Africa and the successful implementation of the industrialisation strategies in the countries of Southern Africa is one of the clear pathways to economic development.