South Africa-BRIC-SADC Trade Alliances and the South African Economy

Abstract

The article discusses the implications of South Africa-Brazil Russia India China-Southern African Development Community (BRIC-SADC) trade alliances on South Africa’s economic growth. The analysis follows the periods in which South Africa is mired by fluctuating exchange rate and rising cost of living, as denoted by the rising consumer price index (CPI). In order to understand the implications, an autoregressive redistributive modelling (ARDL) was utilized on quarterly data from 2005 quarter 1 to 2017 quarter 3, regressing South Africa’s growth against South Africa-BRIC and South Africa-SADC trade balances, the main variables of interest. The empirical results identify a significant long-run relationship of the selected variables. However, the results review a negative contribution of South Africa-BRIC trade on South Africa’s economy, while the South Africa-SADC trade produced positive results. Trade composition remains a major challenge for South Africa-BRIC trade. Continued innovation and research and development will shift reliance on primary commodities for exports to mechanized products, hence increasing gains from the lucrative BRICS trade and the non-utilized SADC trade.