The conventional approach to increasing economic growth - increasing inputs, such as labour and capital, is not always possible. The wider, fundamental sources of economic growth need to be considered too. Foreign aid is a temporary lifeline and does not spur economic growth. Conversely, financial assistance negatively affects growth and can hamper development prospects. Economic freedom and economically freer countries have been associated with higher growth rates, higher per capita incomes, greater volumes of trade, prosperity and overall wellbeing. By improving their economic freedom, deregulating the economy and allowing economic freedom to prosper, countries can experience sustained GDP growth. Previous studies have shown that economic freedom and economic growth are exponentially related - and that by initially becoming freer, countires can increase their growth rates at higher rates. The main objective of the SADC is to achieve development and economic growth, to alleviate poverty and enhance the standard and quality of life for the peoples of Southern Africa. The SADC is attempting to achieve economic integration through macroeconomic convergence. A number of macroeconomic variables have been set to act as primary indicators. These include inflation, fiscal balance, public debt and the current account balance. By introducing the concept that economic freedom can lead to higher growth rates and being able to identify economic freedom, it makes it possible to investigate how the SADC can achieve its set goals by becoming freer. By investigating individual components that constitute the overall freedom index, it becomes possible to establish the relationship that exists between this viriable and economic growth. This will illustrate where deregulation and freedom are most effective and where policy decisions need to be highlighted. The 2008 economic crisis revealed that countries that decreased their economic freedom have fared worse than countries allowing freedom to prosper. Government fiscal stimulus has had no positive impact on growth rates; the negative effects of reducing economic freedom will onlky be fully seen in future years. However, the majority of the SADC countries showed a relatively strong fiscal stance during the recession. This study established whether that a positive relationship between economic freedom and economic growth in the SADC. Secondly, the direction of causality that economic freedom leads to economic growth. The findings reveal that economic freedom fosters economic growth in general, and for the SADC in particular. Empirical evidence has been found for the SADC; and the implications of becoming freer are more fully explained.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:nmmu/vital:8983 |
| Date | January 2011 |
| Creators | Gorlach, Vsevolod Igorevich |
| Publisher | Nelson Mandela Metropolitan University, Faculty of Business and Economic Sciences |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis, Masters, MCom |
| Format | xvii, 193 leaves, pdf |
| Rights | Nelson Mandela Metropolitan University |
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