Determinants of Economic Growth for SADC Nations: A Fixed Effects Approach
Keywords:
Economic Growth, SADC, Fixed effects, Gross domestic product, Panel data analysis, Ordinary least squares, Specification test, Adjusted R2 valueAbstract
In order to accurately forecast economic growth, it is important that growth determinants are identified. However Africa and Southern African Development Community (SADC) region in particular have not identified any determinants of economic growth that are peculiar to the SADC region. In this study determinants of economic growth are gathered and evaluated for sixteen SADC countries for twenty two years (2000 to 2021), that dictates use of panel data analysis, whereas panel data may have group effects, time effects or both. Data is taken from various sources but mainly the World Bank website for different SADC countries contributing
in the world economy. In this article, the comparison of ordinary least squares (OLS) model and fixed effects models (FEM) for SADC nations’ panel data were carried out. F-test was used as a specification test to make a selection between OLS model and fixed effects model. A fixed effects model with an adjusted R2 value of 98% which is very plausible was realised to be the best model to handle the SADC community economic data.
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