Trade and growth in SACU countries: A panel data analysis

Recent research from the IMF and the World Bank suggests that restrictive trade policies could lead to poor economic growth in many developing countries. This paper exploits over 30 years of panel data from five Southern African Customs Union (SACU) countries – Botswana, Lesotho, Namibia, South Africa, and Swaziland – to investigate the possible link between trade liberalization and economic growth. The paper contributes to the literature by introducing multiple indicators of liberalization to estimate the possible relationships between trade openness and economic growth. In particular, we use four different trade liberalization indicators: (i) tariffs, (ii) real effective exchange rates (REER), (iii) trade ratios, and (iv) adjusted trade ratios. The results from our fixed-effect regression models indicate that there is little, if any, compelling evidence that trade liberalization has had a positive impact on the economic growth on SACU countries over the last 30 years.