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The impact of regional integration on socio-economic development in Southern African Customs Union countriesTafirenyika, Blessing 03 1900 (has links)
Regional integration gained popularity and is prioritised globally, especially in developing
economies, including those on the African continent. This is based on its potential to
accelerate trade, stimulate economic growth, and increase access to basic necessities
and to induce a sustainable increase in economic output and improved standards of living.
Regional integration in the context of developing economies is entirely implicit. Modern
literature observes it as a policy option for dealing with a wide variety of issues related to
politics, economic factors, and societal welfare. The SACU, existing since 1910, made
several trade agreements globally. The union aims at reducing inequalities, ensuring
continuous improvement in the general welfare of the population, and sustainable
economic growth. Research, though, indicates that the region persistently reflects poor
socio-economic conditions. This is accompanied by limited development in infrastructure,
lowly skilled and experienced workforce. Primary sector activities dominate their
economies, such as mining and agriculture, high levels of inequalities and poverty.
Regional integration was implemented differently in several countries globally, and Africa
in particular. The research noted that literature on regional integration and its implications
on socio-economic development lacks, especially in the context of SACU. A deficiency
was also emphasised the universal measurement of regional integration, which is not
standardised. Some research employed single variables as a proxy, whilst some
composite indices were also compiled and implemented, suiting the diverse setups and
environments. The development measurements, therefore, cannot universally be applied
attributable to context-specific concerns, prevalent in regions or countries. This study
developed the SACU Regional Integration Index (SRII) because the existing indices on
regional integration are limited concerning applicability. Most of the indices established in
the literature were developed for specific countries and regions with diverse
characteristics from those of the SACU region. In addition to a detailed literature review
and closing methodological divergencies, this study evaluated the effects of regional
integration on socio-economic development in the SACU countries. The objectives of the
study were first, to produce the SACU Regional Integration Index. Second, the study
aimed at evaluating the effect of regional integration on various socio-economic
development factors listed as economic growth, investments, and the Human
Development Index (HDI), inequalities and poverty. Third, the study provided policy
recommendations to the socio-economic problems encountered by the SACU countries;
and lastly, to implement the proposed SRII as a way of providing policymakers with the
actual impacts. The study employed the principal component analysis (PCA) to construct
the SRII. The Ordinary Least Squares (LSDV), fixed effects and random effects were
employed to ascertain the effect of regional integration on socio-economic development
in the SACU countries. The constructed SACU index comprises four dimensions. These
are trade integration; productive integration; infrastructure integration; and financial and
macroeconomic policies integration. The index revealed that SACU countries are
dominated by trade and productive integration. Further analysis of the results indicated
that collaboration on the financial and macroeconomic policies is lacking and the
infrastructure dimension is lagging in the SACU region. Based on the second objective,
the results indicate that regional integration is critical in improving trade openness and
HDI, especially in Lesotho, Botswana, and Namibia. The effect of regional integration on
real Gross Domestic Product (GDP) growth, inequalities, and poverty reduction was
realised in the long run through the interaction of all variables under study. This supported
the dynamic effects posited by the dynamic theory of regional integration. It was
established that growth, though, in infrastructure is insignificant compared to other
dimensions of regional integration. This explains why regional integration was
unsupportive concerning stimulating investments in all the economies forming the SACU
region. The third objective was to proffer policy recommendations. Several practical policy
recommendations emerged from this study, based on the literature findings and review.
These recommendations include implementing inclusive development programmes,
promotion private sector participation in economic activities, and policies, to boost
production capacity in the countries in this region. Based on the fourth objective, this study
further recommends SACU as a region, to integrate into the global economy. This can be
conducted by participating in global production networks for manufacturing and taking
advantage of emerging economies. This would diversify their export markets and their
sources of finance development. SACU countries should make regional integration and
trade a part of their national and sectoral development plans, ensuring coherent trade
and industrial policies. They should also improve their labour, education, social protection,
and safety nets. With data availability, this research can be extended to incorporate
quarterly data or more years of study. Time-series methods can be applied, such as the
Autoregressive Distributive Lag (ARDL) method. This will increase the sample size and
the number of observations, which can improve the outcome from the statistical and
econometric analysis. Future studies may also evaluate the applicability of the index
constructed in this study. / Economics / D. Phil. (Economics)
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