The impact of trade openness on agricultural growth in South Africa

Abstract

The major purpose is to analyse the relationship between trade openness and agricultural growth. The study employs the ARDL model to assess the influence of trade openness on agricultural growth. Major findings of this study confirm the impact of trade openness for agricultural growth in the long run but not in the short run. Among relevant variables such as foreign direct investment, institutional quality, and inflation; agricultural labour force has been found unimportant in this study. More so, foreign direct investment plays a crucial part in the expansion of the sector, but corruption control inhibits growth in the long run. Due to the insignificance of labour from this study results, South Africa should adopt a more capital-labour ratio in the sector to enhance agricultural involvement and engage both human and physical capital since the former can indirectly influence the latter. Therefore, trade openness can be considered a key aspect in supporting agricultural expansion through the accumulation of capital goods and the export of consumable agricultural products.