This paper aims to decompose the sources of growth in economies in the Southern African region’s Common Monetary Area and in the provinces of South Africa. Decomposition results for the Common Monetary Area reveal that the growth of aggregate and sectoral gross domestic product is driven by input, without increasing efficiency in production or benefiting from technological progress, which is unsustainable. Negative technical change implies that countries are unable to reap the benefits from shifts in technology. Countries experiencing input-driven growth in the secondary sector, such as Namibia and Eswatini, have the potential to achieve growth through efficiency improvements and by adopting technology. Output growth in the provinces of South Africa is negatively contributed by changes in technical efficiency, which suggests that policy makers should raise growth further by emphasizing improvements in efficiency in these provinces.
We investigate the relevance of beta (β, absolute and conditional) and sigma (σ) convergence in the economies of the Common Monetary Area of Southern Africa and in the provinces of the Republic of South Africa using panel data, allowing an understanding of growth and inequality in the region. The region has experienced β- and σ-convergence; however, growth rates of per capita gross domestic product are low at aggregate and sectoral levels. At sectoral level, the performance of the tertiary sector is better than that of the primary and secondary sectors. The relatively poor performance of the primary and secondary sectors needs policy attention. For the provinces of South Africa, capital expenditure on key sectors such as education and health can enhance growth rate, whereas the overall revenue expenditure retards growth. Therefore, provinces’ capital budgets need to be managed well within the limitation of revenue expenditure to avoid fiscal imbalances.
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