Exhaustible resources and the hotelling rule : an empirical test of the hotelling rule's significance to gold production in South Africa
- Authors: Mlambo, Courage
- Date: 2017
- Subjects: Natural resources -- Mathematical models Econometrics
- Language: English
- Type: Thesis , Doctoral , PhD
- Identifier: http://hdl.handle.net/10353/4738 , vital:28507
- Description: The study sought to test the applicability of the Hotelling rule in South Africa. In environmental economics, the Hotelling rule has come to be a pillar of the exhaustible resources framework and in addition to this, it has presented essential insights into the consumption and extraction of non-renewable resources. Hotelling sought to address one important question which had been unanswered regarding the depletion of exhaustible resources: How much of the natural resource in question should be consumed presently and how much of it should be stocked up for future generations? The focus was to find a solution for those involved in the exploitation of natural resources to choose between the current value of the natural resource if extracted and sold and the future increased value of the asset if left unexploited. According to the Hotelling rule, the extraction path in competitive market economies will, under certain circumstances, be socially optimal. An extraction path that is not socially optimal compromises the welfare of future generations. The welfare of South Africa’s present population and more especially in the future will be greatly determined by the stock of natural resources available and the quality of the environment. Currently, the production processes deplete natural resources. Concern with the supposed increasing scarcity of gold in South Africa, and the possibility of running out of gold, has become a source of concern. South Africa’s gold reserves (gold in the ground that can be extracted profitably) are becoming depleted at an alarming rate. Most reserves are already exhausted; and the costs involved in mining lower-grade ore, and deposits located very deep in the ground, are becoming excessive. In light of this, this study sought to test the applicability of the Hotelling rule in South Africa. In order to empirically test the Hotelling rule, the study was guided by previous literature that had sought to test it. In this regard, the study used both descriptive and inferential statistics. The study has three data analysis chapters. The first two presented and examined the time series properties of gold prices, gold production and gold consumption. The third data analysis chapter examined the relationship between gold price and interest rates. In the first two data analysis chapters, visual inspection, growth rates, variance ratio tests and advanced unit root tests were used to examine the time series properties of gold prices, gold production and gold consumption. Results showed that the behaviour of the gold price series and gold production series in South Africa have a behaviour that is socially optimal. This is in line with the Hotelling rule. The rule predicts exponentially increasing resource prices and this result in mineral resources following the path of the positive trend. The positive trend is prompted by the increasing price reflecting the increasing scarcity of the resource. However, consumption trends were seen to be violating the Hotelling rule. The Hotelling rule predicts that the price increases until it eventually reaches the choke price, where the quantity demanded decreases to zero. However, in contrast to this, results showed that the demand for gold has been increasing instead of decreasing. This is not in line with the Hotelling rule. Furthermore the relationship between interest rate and gold price was negative and this suggested that the price of gold was not rising at the rate of the interest rate. The results of the study suggested that gold production is not following a social optimally path. The study recommended that the government come up with measures that prolong the lifespan of the gold reserves. These included research and development to promote technological innovations in the mining sector. This may make it possible for firms to access lower-grade ores. The study also recommended that since the Hotelling rule partly applied in the gold sector, there is a need to adopt some other theoretical measures that can ensure that the proceeds from the gold taxes are used in the most effective way.
- Full Text:
- Date Issued: 2017
- Authors: Mlambo, Courage
- Date: 2017
- Subjects: Natural resources -- Mathematical models Econometrics
- Language: English
- Type: Thesis , Doctoral , PhD
- Identifier: http://hdl.handle.net/10353/4738 , vital:28507
- Description: The study sought to test the applicability of the Hotelling rule in South Africa. In environmental economics, the Hotelling rule has come to be a pillar of the exhaustible resources framework and in addition to this, it has presented essential insights into the consumption and extraction of non-renewable resources. Hotelling sought to address one important question which had been unanswered regarding the depletion of exhaustible resources: How much of the natural resource in question should be consumed presently and how much of it should be stocked up for future generations? The focus was to find a solution for those involved in the exploitation of natural resources to choose between the current value of the natural resource if extracted and sold and the future increased value of the asset if left unexploited. According to the Hotelling rule, the extraction path in competitive market economies will, under certain circumstances, be socially optimal. An extraction path that is not socially optimal compromises the welfare of future generations. The welfare of South Africa’s present population and more especially in the future will be greatly determined by the stock of natural resources available and the quality of the environment. Currently, the production processes deplete natural resources. Concern with the supposed increasing scarcity of gold in South Africa, and the possibility of running out of gold, has become a source of concern. South Africa’s gold reserves (gold in the ground that can be extracted profitably) are becoming depleted at an alarming rate. Most reserves are already exhausted; and the costs involved in mining lower-grade ore, and deposits located very deep in the ground, are becoming excessive. In light of this, this study sought to test the applicability of the Hotelling rule in South Africa. In order to empirically test the Hotelling rule, the study was guided by previous literature that had sought to test it. In this regard, the study used both descriptive and inferential statistics. The study has three data analysis chapters. The first two presented and examined the time series properties of gold prices, gold production and gold consumption. The third data analysis chapter examined the relationship between gold price and interest rates. In the first two data analysis chapters, visual inspection, growth rates, variance ratio tests and advanced unit root tests were used to examine the time series properties of gold prices, gold production and gold consumption. Results showed that the behaviour of the gold price series and gold production series in South Africa have a behaviour that is socially optimal. This is in line with the Hotelling rule. The rule predicts exponentially increasing resource prices and this result in mineral resources following the path of the positive trend. The positive trend is prompted by the increasing price reflecting the increasing scarcity of the resource. However, consumption trends were seen to be violating the Hotelling rule. The Hotelling rule predicts that the price increases until it eventually reaches the choke price, where the quantity demanded decreases to zero. However, in contrast to this, results showed that the demand for gold has been increasing instead of decreasing. This is not in line with the Hotelling rule. Furthermore the relationship between interest rate and gold price was negative and this suggested that the price of gold was not rising at the rate of the interest rate. The results of the study suggested that gold production is not following a social optimally path. The study recommended that the government come up with measures that prolong the lifespan of the gold reserves. These included research and development to promote technological innovations in the mining sector. This may make it possible for firms to access lower-grade ores. The study also recommended that since the Hotelling rule partly applied in the gold sector, there is a need to adopt some other theoretical measures that can ensure that the proceeds from the gold taxes are used in the most effective way.
- Full Text:
- Date Issued: 2017
The impact of intra- and inter- regional integration on trade flows in Africa
- Authors: Taylor, Nina-Mari
- Date: 2017
- Subjects: International trade Trade blocs Regionalism
- Language: English
- Type: Thesis , Doctoral , DCom
- Identifier: http://hdl.handle.net/10353/12408 , vital:39260
- Description: Regional integration is regarded as a formation which would allow African countries to improve their trade performance and economic growth. By subscribing to such a regional integration grouping, successful regional trade integration could assist African countries in achieving economies of scale, expand respective domestic markets, reduce marginalisation as well as the collective utilisation and exploitation of resources. Such achievements could, gradually, raise the competitiveness of African countries in respect of the global market. By collaborating in regional integration agreements, groups of countries are sought to increase their collective bargaining power and co-operation amongst the member countries. Regional integration can, therefore, be regarded as a necessary means by which economic development, growth and trade can be enhanced amongst African countries. The associated advantages and benefits of regional integration could improve the productive capacity of African counties and strengthen both their individual and continental position in the process of globalisation and integration into the world economy. This study endeavours to examine the impact of intra-regional integration and inter-regional integration on trade flows among and between: SADC, COMESA, ECOWAS and the EAC. The relevant theoretical and empirical literature regarding regional integration is considered as well as the challenges faced by regional economic communities in Africa. The study is based on an Augmented Gravity Model and it employs Panel Data Estimation Techniques and Panel Unit Root Tests. The Hausman test results proved the Fixed Effects Model to be the most applicable to the study. The empirical findings revealed that both intra-regional integration and inter-regional integration had a positive bearing on trade flows and between: SADC, COMESA, ECOWAS and the EAC. Hence, regional integration is concluded as having a prominent role in promoting trade flows in Africa and the study recommends that African countries and regional economic communities should pursue deeper economic integration and continental integration.
- Full Text:
- Date Issued: 2017
- Authors: Taylor, Nina-Mari
- Date: 2017
- Subjects: International trade Trade blocs Regionalism
- Language: English
- Type: Thesis , Doctoral , DCom
- Identifier: http://hdl.handle.net/10353/12408 , vital:39260
- Description: Regional integration is regarded as a formation which would allow African countries to improve their trade performance and economic growth. By subscribing to such a regional integration grouping, successful regional trade integration could assist African countries in achieving economies of scale, expand respective domestic markets, reduce marginalisation as well as the collective utilisation and exploitation of resources. Such achievements could, gradually, raise the competitiveness of African countries in respect of the global market. By collaborating in regional integration agreements, groups of countries are sought to increase their collective bargaining power and co-operation amongst the member countries. Regional integration can, therefore, be regarded as a necessary means by which economic development, growth and trade can be enhanced amongst African countries. The associated advantages and benefits of regional integration could improve the productive capacity of African counties and strengthen both their individual and continental position in the process of globalisation and integration into the world economy. This study endeavours to examine the impact of intra-regional integration and inter-regional integration on trade flows among and between: SADC, COMESA, ECOWAS and the EAC. The relevant theoretical and empirical literature regarding regional integration is considered as well as the challenges faced by regional economic communities in Africa. The study is based on an Augmented Gravity Model and it employs Panel Data Estimation Techniques and Panel Unit Root Tests. The Hausman test results proved the Fixed Effects Model to be the most applicable to the study. The empirical findings revealed that both intra-regional integration and inter-regional integration had a positive bearing on trade flows and between: SADC, COMESA, ECOWAS and the EAC. Hence, regional integration is concluded as having a prominent role in promoting trade flows in Africa and the study recommends that African countries and regional economic communities should pursue deeper economic integration and continental integration.
- Full Text:
- Date Issued: 2017
External financial flows, domestic savings and economic growth in the Southern African development community (SADC)(1980-2013)
- Authors: kapingura, Forget Mingri
- Date: 2016
- Subjects: International finance Saving and investment -- South Africa Capital movements
- Language: English
- Type: Thesis , Doctoral , Degree
- Identifier: http://hdl.handle.net/10353/5198 , vital:29100
- Description: .Most countries in the SADC region experience low levels of domestic savings. This calls for the need to explore other sources of financial flows to bridge the gap between domestic capital demand and supply, and one such source is external financial flows. It is with this background that this study examined the relationship between the different forms of external financial flows, domestic savings and economic growth in the SADC region for the period from 1980 to 2013. Firstly the study examined the impact of the different forms of external financial flows on economic growth in the region. The empirical results revealed that FDI, CBF and remittances have a significant impact on economic growth in the SADC region. ODA was however found to be insignificant. When the different types of external financial flows were interacted with institutions they all became significant in explaining economic growth in the region. The second aspect was to examine the extent to which external financial flows complement or displace domestic saving. The empirical results revealed that external financial flows with the exception of ODA complement domestic savings in the region. In addition, there is evidence of investment generating additional savings in the region, which is likely to be through the economic growth channel. The last objective of the study was to examine the determinants of external financial flows to the SADC region. The empirical results revealed that both push and pull factors are important in determining external financial flows in the region. Of great importance was the observation that events in the source country determine financial flows to the region. Proxy for financial integration was found to be positive though insignificant, pointing out that the region may not be benefiting from cross-border bank flows due to the region being disintegrated. This suggests that the region may benefit from increased cross-border bank flows if the region is integrated. Overall, the results from the study suggest that external financial flows are important to the region in providing the much needed development finance. However this also suggests that the foreign capital channel is another source in which a crisis from a developed country can be transmitted to the SADC region.
- Full Text:
- Date Issued: 2016
- Authors: kapingura, Forget Mingri
- Date: 2016
- Subjects: International finance Saving and investment -- South Africa Capital movements
- Language: English
- Type: Thesis , Doctoral , Degree
- Identifier: http://hdl.handle.net/10353/5198 , vital:29100
- Description: .Most countries in the SADC region experience low levels of domestic savings. This calls for the need to explore other sources of financial flows to bridge the gap between domestic capital demand and supply, and one such source is external financial flows. It is with this background that this study examined the relationship between the different forms of external financial flows, domestic savings and economic growth in the SADC region for the period from 1980 to 2013. Firstly the study examined the impact of the different forms of external financial flows on economic growth in the region. The empirical results revealed that FDI, CBF and remittances have a significant impact on economic growth in the SADC region. ODA was however found to be insignificant. When the different types of external financial flows were interacted with institutions they all became significant in explaining economic growth in the region. The second aspect was to examine the extent to which external financial flows complement or displace domestic saving. The empirical results revealed that external financial flows with the exception of ODA complement domestic savings in the region. In addition, there is evidence of investment generating additional savings in the region, which is likely to be through the economic growth channel. The last objective of the study was to examine the determinants of external financial flows to the SADC region. The empirical results revealed that both push and pull factors are important in determining external financial flows in the region. Of great importance was the observation that events in the source country determine financial flows to the region. Proxy for financial integration was found to be positive though insignificant, pointing out that the region may not be benefiting from cross-border bank flows due to the region being disintegrated. This suggests that the region may benefit from increased cross-border bank flows if the region is integrated. Overall, the results from the study suggest that external financial flows are important to the region in providing the much needed development finance. However this also suggests that the foreign capital channel is another source in which a crisis from a developed country can be transmitted to the SADC region.
- Full Text:
- Date Issued: 2016
The impact of export diversification on economic performance in South Africa: 1980-2012
- Authors: Choga, Ireen
- Date: 2014
- Language: English
- Type: Thesis , Doctoral , Doctor of Commerce (in Economics)
- Identifier: vital:11489 , http://hdl.handle.net/10353/d1018223
- Description: A widely held view is that export diversification constitutes an important component of export led growth, and poses a major challenge for many developing countries. Given this, the role of export diversification on economic growth warrants a fresh analysis in South Africa. The primary objective of this study is to determine the impact of export diversification on economic growth in South Africa. In this context, the study seeks to establish the relationship between export diversification, export stability and export growth. Initially, the study examines the extent and structure of export diversification in South Africa; it then empirically establishes the link between export diversification, export stability and export growth. Finally, it develops a model and investigates the effects of export diversification on economic growth in South Africa. As an attempt to fulfill the proposed objectives, this study uses quarterly data for the period 1980 to 2012 as well as data for 28 selected groups of commodities to investigate the effects of export diversification on economic growth in South Africa. Measures of export diversification and structural changes in exports in the context of South Africa were discussed. The findings of this study are that the Commodity Specific Cumulative Experience function showed that plots for manufactured commodities are shifted to the right indicating that the commodities are non-traditional in nature whereas, plots for primary commodities are shifted to the left. Results also indicated that South Africa relies more on traditional exports than manufactured exports. Various measures of export instability were used to calculate the export instability index in South Africa. The results of the study reveal that the South African export basket is slightly diversified, and the less diversified or primary commodities are associated with high instability VECM approach was used to allow us to establish the extent of influence of export diversification and other explanatory variables on economic growth. Consistent with other researchers, the study found that export diversification plays significant roles to economic growth in South Africa. A number of diagnostic checks were employed to validate the parameter evaluation of the outcomes achieved by the model. The model passed all the diagnostic checks. On the whole, the results to a larger extent painted a pictured that export diversification is important or drives economic growth in South Africa. Corroborating our findings with work of other scholars, we conclude that our results are complementary.
- Full Text:
- Date Issued: 2014
- Authors: Choga, Ireen
- Date: 2014
- Language: English
- Type: Thesis , Doctoral , Doctor of Commerce (in Economics)
- Identifier: vital:11489 , http://hdl.handle.net/10353/d1018223
- Description: A widely held view is that export diversification constitutes an important component of export led growth, and poses a major challenge for many developing countries. Given this, the role of export diversification on economic growth warrants a fresh analysis in South Africa. The primary objective of this study is to determine the impact of export diversification on economic growth in South Africa. In this context, the study seeks to establish the relationship between export diversification, export stability and export growth. Initially, the study examines the extent and structure of export diversification in South Africa; it then empirically establishes the link between export diversification, export stability and export growth. Finally, it develops a model and investigates the effects of export diversification on economic growth in South Africa. As an attempt to fulfill the proposed objectives, this study uses quarterly data for the period 1980 to 2012 as well as data for 28 selected groups of commodities to investigate the effects of export diversification on economic growth in South Africa. Measures of export diversification and structural changes in exports in the context of South Africa were discussed. The findings of this study are that the Commodity Specific Cumulative Experience function showed that plots for manufactured commodities are shifted to the right indicating that the commodities are non-traditional in nature whereas, plots for primary commodities are shifted to the left. Results also indicated that South Africa relies more on traditional exports than manufactured exports. Various measures of export instability were used to calculate the export instability index in South Africa. The results of the study reveal that the South African export basket is slightly diversified, and the less diversified or primary commodities are associated with high instability VECM approach was used to allow us to establish the extent of influence of export diversification and other explanatory variables on economic growth. Consistent with other researchers, the study found that export diversification plays significant roles to economic growth in South Africa. A number of diagnostic checks were employed to validate the parameter evaluation of the outcomes achieved by the model. The model passed all the diagnostic checks. On the whole, the results to a larger extent painted a pictured that export diversification is important or drives economic growth in South Africa. Corroborating our findings with work of other scholars, we conclude that our results are complementary.
- Full Text:
- Date Issued: 2014
Informal cross border trading and poverty reduction in the Southern Africa development community: the case of Zimbabwe
- Authors: Kachere, Wadzanai
- Date: 2011
- Subjects: Poverty -- South Africa , Households -- Zimbabwe , Food supply -- Zimbabwe , Entrepreneurship -- Zimbabwe , Poverty -- Economic aspects -- Zimbabwe
- Language: English
- Type: Thesis , Doctoral , PhD (Social Science Dev)
- Identifier: vital:11421 , http://hdl.handle.net/10353/500 , Poverty -- South Africa , Households -- Zimbabwe , Food supply -- Zimbabwe , Entrepreneurship -- Zimbabwe , Poverty -- Economic aspects -- Zimbabwe
- Description: This study investigates the impact of informal cross border trading on poverty reduction in Zimbabwe. In the context of this study, the term Informal Cross Border Trade (ICBT), is used to describe the activities of small entrepreneurs who are involved in buying and selling across national borders. The study focuses on whether the stated activities are lifting those participating out of poverty. The research problem is examined through an assessment of the income levels, assets acquirement, expenditures patterns, food security and family relations. The hypotheses tested in the research are that, “The extent of ICBT is significant in Zimbabwe; ICBT in the Southern Africa region is mainly dominated by women; and that ICBT contributes positively to poverty reduction”. In this context, poverty reduction is said to have occurred when informal cross border trading would have resulted in an improvement in the socio-economic wellbeing of traders‟ households. The Poverty Datum Line (PDL) is used as the measure of households‟ well-being. To assess the impact of ICBT on well-being, a survey was conducted whereby in-depth interviews using the questionnaire method were used to collect primary data. Secondary information was obtained from documentary searches at institutions and also using internet searches. From this study it has been found that ICBT has both positive and negative impacts with regard to social welfare. With regard to economic welfare, based on poverty indicator measures used in the study, ICBT contributes positively to Poverty Reduction. Thus the analysis revealed that informal cross border trade plays an important role in alleviating economic hardships, reducing poverty and enhancing welfare and human development in Zimbabwe.
- Full Text:
- Date Issued: 2011
- Authors: Kachere, Wadzanai
- Date: 2011
- Subjects: Poverty -- South Africa , Households -- Zimbabwe , Food supply -- Zimbabwe , Entrepreneurship -- Zimbabwe , Poverty -- Economic aspects -- Zimbabwe
- Language: English
- Type: Thesis , Doctoral , PhD (Social Science Dev)
- Identifier: vital:11421 , http://hdl.handle.net/10353/500 , Poverty -- South Africa , Households -- Zimbabwe , Food supply -- Zimbabwe , Entrepreneurship -- Zimbabwe , Poverty -- Economic aspects -- Zimbabwe
- Description: This study investigates the impact of informal cross border trading on poverty reduction in Zimbabwe. In the context of this study, the term Informal Cross Border Trade (ICBT), is used to describe the activities of small entrepreneurs who are involved in buying and selling across national borders. The study focuses on whether the stated activities are lifting those participating out of poverty. The research problem is examined through an assessment of the income levels, assets acquirement, expenditures patterns, food security and family relations. The hypotheses tested in the research are that, “The extent of ICBT is significant in Zimbabwe; ICBT in the Southern Africa region is mainly dominated by women; and that ICBT contributes positively to poverty reduction”. In this context, poverty reduction is said to have occurred when informal cross border trading would have resulted in an improvement in the socio-economic wellbeing of traders‟ households. The Poverty Datum Line (PDL) is used as the measure of households‟ well-being. To assess the impact of ICBT on well-being, a survey was conducted whereby in-depth interviews using the questionnaire method were used to collect primary data. Secondary information was obtained from documentary searches at institutions and also using internet searches. From this study it has been found that ICBT has both positive and negative impacts with regard to social welfare. With regard to economic welfare, based on poverty indicator measures used in the study, ICBT contributes positively to Poverty Reduction. Thus the analysis revealed that informal cross border trade plays an important role in alleviating economic hardships, reducing poverty and enhancing welfare and human development in Zimbabwe.
- Full Text:
- Date Issued: 2011
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